According to a new analysis by Capital Economics, The UK’s rental crisis is exacerbated by record net immigration as housing supply fails to keep pace with population growth. According to Capital Economics, the number of rental households formed by new immigrants has grown from about 80,000 per year in the 2010s to more than 200,000 in recent years.
The analysis is based on data from the Office for National Statistics which suggest that 80% of new immigrants rent in the private sector. The findings suggest that the UK economy’s reliance on foreign workers and a lack of housing construction are colliding, worsening the cost of living crisis for renters. “High net immigration has caused a sharp increase in demand for rental housing, which has pushed up the cost of rent relative to the average salary,” Andrew Wishart, senior real estate economist at Capital Economics, tells the media.
Net immigration has soared into the UK after the pandemic, reaching a record 745,000 people in 2022. It was led by international students, healthcare workers and migrants from Hong Kong and Ukraine. Capital Economics says rental demand has also been boosted by would-be homeowners having to rent for longer due to high mortgage interest rates.
However, the company adds that even if all these potential buyers rented instead, the resulting increase in demand for rent would be much lower than that of migration. Wishart, speaking to Bloomberg, warned that many low-income families are being priced out of the rental market, with waiting lists for social housing and a rise in the number of people sleeping on the streets.
