If you are renting, you need to know one thing- shopping for a better residence should always be on the table. You never know when the golden goose may lay its egg. Still, at the moment, in the UK, the situation is anything but ordinary. With the 40-year-high inflation, our money is losing value faster than a cheetah on steroids, while at the same time, rentals are going up, and the mortgage crisis is finally bringing the housing market down. So, in this highly complicated period that we currently call present, is it a good idea to move rentals?
What’s going on?
Before we talk about rentals, you need to understand everything going on in the UK and worldwide to grasp the situation fully. For starters, if you haven’t been living in a secluded cave somewhere in the Andes, surviving on alpaca meat and prayer, you’d have noticed a small global event called the COVID-19 Pandemic. The virus, which started from a guy who tried to become Batman in an extremely misguided way, closed the entire world for about two years, and naturally, the economy took a horrendous hit. Back then, economists, experts, and even 5-year-olds could predict that there would be a backlash in the form of an economic crisis.
As foreseen, after the economy started reviving, energy demand became significantly bigger.
Thus, the price soared. Naturally, more costly energy spells pricier goods in the market, leading to inflation. So far, so good. This was all predicted, and governments around the world allegedly had a plan. Then Putin said, “hold my beer,” and invaded Ukraine. As the two leading producers of oil, wheat and sunflowers, were way too busy killing each other, these fundamental goods for feeding the world became scarce. Naturally, their prices skyrocketed, and the costs of everything in stores soon followed. Moreover, the collective West couldn’t afford to fund the Russian war machine by buying energy goods from it, so they put a justified ban. However, Putin’s country is the leading gas and second-largest petroleum exporter, so this ban led to a significant increase in fuel prices, which furthermore gave wings to inflation.
So here we are now, with record-high inflation and constant increase in prices and rents while wages are left behind.
What about the housing market
The housing market did surprisingly well in the first half of the year. Actually, up until August 2022, housing prices grew rapidly, and on an annual basis, they are still higher than they were in October-November 2021. Still, after August 2022, the housing market began to slow down, and it experienced the first price drop on a monthly basis in quite some time now. Moreover, with the Bank of England raising the basic interest rate in the hopes of battling the ever growing inflation, and their plans to increase it by 6 per cent in 2023, the mortgage lenders started ceasing some of their products.
Moreover, most people started thinking twice about whether to sign a long-term contract with constantly rising monthly installments. To top it all off, many current loan receivers will have to default on their payments. They will probably sell their property to recoup their losses, flooding the struggling market. This will lead to a drastic fall in the housing market, as experts predict it will shrink by as much as 20%.
What does this mean for renters?
Unfortunately, the news is not good for renters. As the demand for rental apartments increases, so will the prices. Thankfully, the UK government has placed some vital regulations that prevent landlords from simply extorting money from people. Depending on your contract, owners may increase your rent a maximum of once per year if you have a periodic tenancy. If you have a fixed-term tenancy, your landlord can’t increase your rent for the duration of the agreement without your specific approval.
Many landlords may try to convince you that you need to sign off on the rent increase, but don’t do it without learning all your rights first.
So, should you move?
That’s a rather difficult question. With the rapid inflation, if you are on a long-term fixed contract that won’t expire in the next year, you should definitely stick to what you have right now. However, if you are on a periodic tenancy, you better look for a more permanent solution. The same goes if your contract expires in the next few months and the landlord is reluctant to sign off on a new deal soon. The reasoning is that in the first half of 2023, the expected rent increase will be about 11%. That’s definitely not something you should take lightly, as for every £1000, you will have to add another £100 on top. On an annual basis, that’s a whole additional monthly payment.
This being said, just taking your stuff and leaving is not really an option, as you need to calculate the whole moving expense as well.
What should you be prepared for when moving rentals?
For starters, you need to find a better deal for a matching accommodation. You should expect the asking price to be a bit higher, as everything I just mentioned is not top-secret information but public knowledge anyone can acquire. Still, an excellent way to find just as good, or even better, accommodation is to change the area where you reside. It’s not a secret that some postcode areas are more expensive than others.
Secondly, you will have to make sure you can move your belongings right away or at least store them somewhere while you wait for your new accommodations to get ready. Luckily there are many storage-unit providers all across the UK, and the prices are not that high. Just make sure your storage unit has flexible pricing based on your needs, perfect security and insurance.
Moreover, if you can move right away, you should consider whether you will need a moving crew or any other services that will drive you to allocate additional funds. Studies suggest that moving homes is one of the most stressful parts of human life. However, some evidence shows that if you hire a company to move you entirely, this will undoubtedly save friendships, relationships and even family connections.
Still, if those are just highly-suggested options, you should definitely go for an end-of-tenancy cleaning, as this will secure your deposit back. And while the average price of a 1-bedroom apartment varies between £180 to £210 depending on the region and the service provider you use, it can literally save you a couple of thousand pounds.
A wise decision would be to find a company that offers all of the above so you won’t have to deal with different companies, bookings and terms and conditions.
So, is it a good idea to move rentals amidst a 40-year-high inflation rate?
Probably this wouldn’t be a shocker, but it really depends on your current situation. The UK’s housing market is going down the drain, which will significantly boost rental costs. However, even though this article is a great way to start your research, we urge you to make a thorough and proper analysis of whether it will be in your best interest to seek another rental place. There is simply no single answer to that question. It all depends on you.