LONDON — Growing rents and a sharp rise in the number of people renting homes means private landlords are earning ever-increasing sums from renters, and deepening a financial division between those who own a home and those who don’t.
Estate agents Savills said landlords earned £54 billion in the year to June, according to a Times report — twice the total amount of interest homeowners paid on their mortgages, who currently benefit from record-low interest rates.
The private rental figure is up by £14 billion in five years, and represents a 35% increase from a 21% rise in the number of homes, Savills said.
The revenue is driven largely by the vast numbers of millennials who cannot afford to buy a property and are forced to pay increasingly expensive rents.
Around 5.3 million UK households are privately rented, of which those aged between 25 and 34 form the largest group at 1.5 million, according to government figures.
The chronic shortage of UK housing is currently an important political issue. Labour leader Jeremy Corbyn last week pledged to introduce rent caps if he becomes prime minister, and Theresa May pledged a further £10 billion for the government’s Help-to-Buy scheme which helps first-time buyers to purchase homes.
Lucian Cook, head of residential research at Savills, told the Times that high rents in London could push graduates away and threaten the city’s competitiveness.
“The risk is that this starts to become a threat to London’s competitiveness to attract young people into the city,” he said.