Record migration fuelling Britain’s rental crisis, warns Zoopla chief

housing
housing

Record migration has pushed up rents across the UK and contributed to the affordability crisis in the sector, the boss of Zoopla has said.

Richard Donnell, executive director of Zoopla, said record net migration was compounding pressure on rents at a time when many landlords were leaving the sector.

It comes after figures published by the Office for National Statistics last week showed that net migration reached a record 745,000 in 2022. In the two years to June, nearly 1.3m people immigrated to the UK.

Mr Donnell said renting was the “first port of call” for those moving to the country, although some eventually buy their own home. He estimated that as many as nine in ten of people coming to the UK were “in the rental market initially.”

The surge of migrants seeking out accommodation has coincided with record growth in rents. Rents across the UK have increased by a record 8.4pc in the year to October, the Office for National Statistics (ONS) said on Friday.

Surging rents have contributed to a rise in homelessness and the situation has been dubbed a crisis by charities because of increasingly stretched affordability.

Mr Donnell said: “We have a triple whammy on the demand side, one element of which is migration.”

A strong jobs market is also fuelling demand as more people move for work, Mr Donnell said, while high interest rates have also kept many people in the rental market for longer than usual as they are priced out of buying.

Office for Budget Responsibility economist David Miles backed up Mr Donnell’s suggestion that migration was playing a part in rapidly climbing rates.

He told the Telegraph: “It may be that recent high rates of increase in rents is linked to population increase and to fast growth in student numbers. It would be strange if that was not a factor.“

263,000 students moved to the UK in the year to June 2023. ONS figures show that international students accounted for two fifths of people arriving from outside the EU in the year to June.

Mr Donnell said: “A lot of international students have come into the UK which is fine, but there is not enough purpose-built student accommodation. And so you get an overspill of that student demand into the private rented sector.”

Aneisha Beveridge, head of research at Hamptons International, said: “They are most likely to settle in University towns and cities across the country and are most likely to rent.”

Ms Beveridge said that only in exceptional circumstances do students’ parents purchase a property, “although this is still fairly common in Prime Central London for the wealthiest families.”

In London, the fall in migration during Covid was one of the reasons “why rents dropped so much during that time”, according to Ms Beveridge.

She said: “The opening up of borders and travel also coincided with the rental recovery in the capital. However, some of this was domestically driven too as people working from home returned back into offices.”

Claims that overseas renters are fuelling Britain’s affordability crisis will raise pressure on Rishi Sunak to lower migration, with the record numbers sparking a backlash from the right of the Tory Party.

The added pressure from high immigration comes at a time when the supply of homes to rent is also under pressure.

Regulatory and tax changes have made buy-to-let investments less lucrative, meaning fewer new investors are entering the sector and existing landlords are selling up.

One in ten houses advertised on Zoopla are sold by a landlord, Mr Donnell said.

He added: “The total number of private rented homes in this country is stuck at 5.5m and it has been for the last seven years.”

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