Cost of renting a huge burden for millennials

Published on

Millennials renting in the UK are spending upwards of a third of their take home pay of £17,359 on rental payments, according to the latest Landbay Rental Index.

For tenants aged between 18-39 and living alone, 69% of a monthly post-tax income of £1,447 is spent on £1,012 of rent. In a shared house of two people, overall rent of £1,153 adds up to 39% of each tenant’s income, while those co-habiting in a three-bed property would each spend 30% of their monthly take home pay on a rent of £1,322.

Rents have continued to rise over the last five years, increasing by 9% across the UK since April 2012 and by 8% in London – with monthly payments remaining a huge burden on those struggling to save, despite the pace of rental growth beginning to slow since August 2015, from 2.66% to 0.82%. While rents have begun to fall in prime Central London, outer boroughs popular with millennials, such as Barking and Dagenham, Havering and Bexley have seen rents grow by 26%, 18.9% and 18.2%.

Although rents are beginning to turn a corner, for young people, who are often attempting to juggle the double-edged sword of inflation of over 2%, low interest rates – and in many cases large sums of student debt – spending such a percentage of take home pay on rent leaves little to cover regular monthly living costs and bills, and even less to save towards their future, be that a pension or a deposit for a home of their own.

John Goodall, CEO and founder of Landbay said: “Despite the multitude of measures introduced with the aim of encouraging first time home ownership, such as Help to Buy and Shared Ownership schemes, young people make up a significant proportion of the 4.3 million people currently renting across the UK, few with the means to save for the sizeable deposit needed to get on the housing ladder, while also saving for their future. The cost of renting a property remains a huge burden, especially in London where average rents are significantly more expensive than the rest of the country. Is it any wonder that this generation are having to turn to the Bank of Mum and Dad for help?

“Whether tenants are renting as a stepping stone on the way to home ownership – or in some cases choosing to rent for life – this generation are relying on a well-served buy-to-let market to ensure rental growth doesn’t become unbearable. What is now needed is some firm government commitment to improving standards, affordability and supply of rental properties. Institutional investment and the subsequent growth and professionalisation of the private rental sector are already helping control rental growth and improve living standards for renters, so we hope to see some clear plans outlined in this month’s party manifestos ahead of the General Election in June.”

COMMENT ON MORTGAGE SOUP

We want to hear from you!
Leave a comment and get the conversation started.
You need to register to post, so please login or sign up below.

Latest articles

Rightmove warns property tax reforms could stall housing market

Rightmove has warned the government that proposed changes to property taxation risk distorting the...

Bradford retains crown as UK’s leading property hotspot

Bradford has once again been named the country’s most in-demand housing market, topping OnTheMarket’s...

Keystone reduces expat buy-to-let rates and adds new product

Keystone Property Finance has reduced rates across its expat buy-to-let range, cutting selected fixed...

Gatehouse cuts buy-to-let rental rates and eases paperwork

Gatehouse Bank has cut rental rates by 0.25% across its buy-to-let purchase plans for...

The Exeter: most consumers value advice when purchasing insurance

Almost two-thirds of consumers prefer to purchase insurance following professional advice, according to new...

Latest publication

Latest opinions

Bridging the Pond: How large is the US bridging finance market, and compared to the UK?

When we first got started with LendInvest in the UK, post the financial crisis,...

Passing the affordability exam

As teachers and students of various ages have spent August nervously opening exam results...

Investors are changing their approach – and lenders should too

The buy-to-let market never stands still, but the pace of change in recent years...

Leasehold fees, specialists and the need to shop around

Leasehold properties account for around 20% of all dwellings in the UK, and while...

Other news

Rightmove warns property tax reforms could stall housing market

Rightmove has warned the government that proposed changes to property taxation risk distorting the...

Bradford retains crown as UK’s leading property hotspot

Bradford has once again been named the country’s most in-demand housing market, topping OnTheMarket’s...

Bridging the Pond: How large is the US bridging finance market, and compared to the UK?

When we first got started with LendInvest in the UK, post the financial crisis,...