Skyrocketing rent prices have been pricing prospective tenants completely out of much of the market for some time. Coupled with the escalating living-cost crisis, millions are finding it difficult (if not practically impossible) to make ends meet.

When and where the whole thing will begin showing at least modest signs of improvement remains to be seen, but things are almost certainly going to get worse before getting any better.

Younger people in the capital are finding themselves particularly hard hit, where the average cost of renting a home has always been disproportionately high. With average weekly rents having once again broken all records, a sizeable proportion of London’s private renting community is considering leaving the city entirely.

According to a new study conducted by the charitable foundation Trust for London, the average cost of renting a home in London is now £533 per week. This represents an increase of more than 16% since the same time last year, at which point private rentals were already completely unaffordable for many.

As a result, as many as one in four young renters are now saying they may be forced to leave London in the near future due to their growing inability to pay their bills and sustain their lifestyles.

Wages are insufficient to cover living costs

The study also indicated that between April and March this year, the average rental price for a one-bedroom property in London was the equivalent of just over 46% of the average Londoner’s gross median pay. By contrast, renters across the rest of the country use around 26.4% of their gross median pay for rent.

Reporting separately, Foxton Estate Agents said that one of the drivers behind skyrocketing rent prices in London was explosive demand, coupled with minimal available inventory. They said that around 23,000 rental properties were listed on the market in September, meaning that an average of 29 people were competing for each property listed.

There are approximately 9% fewer properties available on the private rental market in London than at the same time last year, while demand has increased by as much as 20 per cent.

Consequently, as many as 20% of younger people are planning on leaving London entirely, as they simply cannot afford to keep spending so much of their money on rent costs alone.

Prices are likely to continue rising

As more and more people pile back into big cities following the mass exodus prompted by the coronavirus crisis, average monthly rents in London are predicted to continue increasing.

Speaking on behalf of Hamptons, head of research Beveridge said that the return to the new normal would most likely continue pushing average London rental prices higher.

“With COVID-19 being pushed further to the back of people’s minds, life in the capital is slowly returning to its new normal. Tenants are returning to the bright lights of the city, and this is driving rental growth to record highs,” she said.

“The rise of remote working means that fewer tenants are moving to the capital specifically for work. In fact, a growing number of tenants choosing to live in London are working fully remotely and could live nearly anywhere in the country. The footloose nature of many jobs today means that it will be culture and lifestyle rather than employment that become the capital’s biggest draw.”

“The current pace of London rental growth is predominantly down to the capital playing catch up with the rest of the country.”

“Today, the average rent in London stands 103% above the average outside the capital. While this gap is up from 96% a year ago, it remains below the 120–30% pre-COVID-19 premium, which has been eroded by strong rental growth outside the capital in recent years. But the current pace of rental growth in London is likely to push the premium closer to its pre-COVID-19 level within two years.”

Understanding where planning permission rules came from and why they exist holds the key to making sense of them in a modern context. Right now, estimates suggest that at least 300,000 new homes need to be built every year for the next decade, just to ensure the government meets its own lofty housing targets.

In reality, the likelihood of this actually occurring is practically zero.

Critics believe that sweeping changes to planning permission rules and general building regulations could hold the key to turning around the UK’s escalating housing crisis. Whether any such alterations come about remains to be seen, as many developers and construction companies continue to find themselves blighted by overly complex rules and regulations.

A brief history of planning permission

As the Second World War drew to a close, the reconstruction of towns and cities across Britain became the government’s top priority. Plans were also drawn up for developing entirely new towns and cities from scratch.

To get things started, the 1946 New Towns Act established a programme for the development of new towns. This resulted in several areas of the country being designated for new town and city projects, the first of which would emerge as Stevenage.

However, the 1947 Town and Country Planning Act followed soon after, placing heavy restrictions on where rapid urbanisation of rural spaces would be permitted. At this point, planning permission needed to be issued by local councils for any developments to proceed.

In 1955, conservative minister Duncan Sandys requested that local councils prohibit the development of new residential zones on the edges of towns and cities, so as to:

A: Check the further growth of a large built-up area.
B: Prevent neighbouring towns from merging into one another.
Preserve the special character of a town.

From the 1990s

There was a moderate easing of planning permission restrictions in the 1990s, or when the Town and Country Planning Act had been updated. At this point, it would only be necessary to apply for planning permission for projects that formerly met the definition of “development”. Things like changes in the primary use of land or buildings, interior alterations, and projects that do not alter the external appearance of buildings could all be performed without applying for approval.

A General Permitted Development Order was implemented in 1995, providing even greater scope and flexibility for developers. Later in 2013, the government acknowledged that the need for residential spaces across the UK should prompt a rethink of current restrictions.

The rules were modified once again, and the conversion of certain commercial properties into residential homes became exempt from planning permission guidelines. However, some of the country’s less reputable and responsible “cowboy” developers exploited the new freedoms, creating tiny and uncomfortable flats out of office spaces that were never meant to accommodate residents full-term.

Recent changes to planning permission

Most of the recent changes to planning permission rules have focused on raising residential standards. New rules were introduced towards the tail end of the COVID-19 crisis to allow more types of commercial conversions, including the repurposing of medical facilities and gyms into residential units.

As things stand, anyone looking to build something new, make significant changes to an existing building, or alter the main use of a building needs to apply for planning permission. None of which is helping new and aspiring developers get their projects off the ground, but there is at least a dedicated Planning Portal now, which is designed to simplify the process of obtaining planning permission.

Property developers and construction companies have not had an easy ride as of late. Ever since the COVID-19 crisis hit, the costs of essential building materials have skyrocketed to unprecedented highs. The war in Ukraine took a further toll on already stretched supply lines, making it impossible for developers to turn a profit without imposing their own lofty price hikes.

With the UK facing its worst collective living-cost crisis in recent history, the immediate outlook for the average household is fairly bleak. But there may be at least a small degree of respite on the horizon for builders and property developers, as construction costs are beginning to plateau.

Better yet, there is reason to believe that building costs will begin to decrease going into 2023, enabling developers and construction companies across the UK to kickstart (or restart) their planned projects.

Will the economic downturn trigger a reduction in building costs?

One of the reasons why building costs increased significantly towards the tail-end of the COVID-19 crisis was the simply insurmountable divide between demand for building materials and available supply. Developers and construction companies across the UK raced to keep up with demand, and in doing so completely swallowed up the available contingency of key materials.

Supply lines dried up, availability of essential materials hit rock bottom and prices skyrocketed as a result.

When this happens, many developers and construction companies decide to shelve planned projects or put their existing projects on hold. They simply had no realistic way of generating meaningful profits with such elevated building costs, so they made the decision to wait things out. Their aim was to sit tight until the market returned to some kind of normality, rather than paying over the odds, and reducing the profitability of their projects in the meantime.

All of this seems to be paying off for many, who have already noted a significant reduction in the cost of some essential building materials. Some have even reported that compared to the end of Q2, they are now receiving quotations up to 10% lower on key materials and components.

These reductions in building costs are resulting from two things: A period of comparatively low demand when costs were disproportionately high and the rectification of a broad range of supply chain issues. Key building materials are still not available in the same plentiful supply they once were but are no longer as difficult to come by.

As a result, the manufacturers and suppliers are not able to charge such high prices for them and low prices are gradually trickling through to property developers and construction companies.

In forwards into 2023

Of course, putting too much stock into what is happening (or appears to be happening) right now may not be advisable. The events of the past few years have taught us that nothing is set in stone, and we have no idea what may be around the next corner.

As the crisis continues to escalate in Ukraine, it is perfectly plausible that major supply chain issues could once again cripple the UK’s property development sector.

Even so, the consensus seems to paint a picture of a slightly more stable and predictable future for the industry as a whole. Building material, component and labour costs may remain elevated indefinitely but are unlikely to hit the same kinds of peaks as those experienced at the height of the COVID-19 crisis.

Property developers and construction companies are exercising greater care and caution than ever before, and in today’s turbulent climate are unwilling to take the kinds of risks they would once have happily accepted as the norm.

The past 12 months alone have added an average of £39,000 to the market value of a UK home. Millions of homeowners have found themselves sitting on a small fortune and understandably want to get the best possible return on their investments.

Conducting home improvements and renovations is one of the best ways to maximise a property’s value before listing it for sale. But exactly how much does it cost to renovate a home, and how can you ensure the improvements you make generate respectable profits?

How much do renovations cost?

A combination of factors over the past few years has seen the costs of property renovations skyrocket. From basic building materials to labour to the latest green technologies, prices across the board are on the rise.

The average loft conversion, for example, now costs around 25% more to undertake than it did two years ago. Alarmingly, the cost of installing a new bathroom in a residential property is also up by as much as 40%.

Renovation costs vary significantly from one property type and area of the UK to the next. According to the Homeowners Alliance, this is how much you can expect to pay to renovate and improve your home in 2022:

Source: hoa.org.uk

On top of the above, experts advise allowing an additional 10% to compensate for unexpected issues and additional costs encountered along the way.

What are the best renovations to add value to a property?

When it comes to generating the best possible ROI with property renovations, some home improvements are known to generate bigger profits than others.

For example, a loft conversion has the potential to generate the biggest profit of all (an average 16% property price increase), followed by a double-story extension at 15%. A single-story extension will typically increase a home’s value by 11%, whereas a complete kitchen renovation can contribute 10% to a property’s resale value.

Meanwhile, adding a conservatory to your home could increase its market value by 9%; a single garage can add an average of 7% to the value of a home; and a medium-scale bathroom refit can contribute 4%. Surprisingly, simply painting and decorating the interiors of a property can boost its asking price by as much as 3%.

How to avoid overpaying

Irrespective of the type of renovations you set your sights on, it is up to you to ensure that you don’t overpay. Before entering into a contract with any builders or construction companies, ensure that they are registered with the likes of Trustmark, the National Federation of Builders, or the Federation of Master Builders.

Using Checkatrade to verify the credentials of other types of contractors is highly recommended, as is requesting recommendations and references from past customers.

Fixed quotations should always be issued in advance of the commencement of a project, and all essential terms and conditions must be agreed upon in writing. You should also be given as much time as needed to evaluate the provider’s reputation and stature, with no pressure to go ahead at any time.

Online reviews and recommendations alone can give you a good idea of whether a service provider or contractor is worth doing business with. If there is a disproportionate quantity of negative feedback or anything untoward about their track record, you could be taking a risk by putting your home in their hands.