How much do you spend on rent?

Around 30% of tenants are spending over 50% of their net income on rent, the latest figures suggest.

The survey of nearly 7,000 tenants shows that the average cost of renting accounts for 38% of tenants’ take-home pay. It also indicates that the gap between demand and supply is wider than a year ago and that the majority of tenants believe that rents will be higher this time next year. The proportion of those who would like to buy but are happy to rent in the meantime has risen slightly to 32% but there is still a majority of ‘trapped renters’ who
would like to buy but cannot afford to do so (56%).

“While the failure of rental supply to keep pace with tenant demand persists, fuelled by the needs of tenants unable or unwilling to buy, our research raises some interesting questions about how high the affordability ceiling is and how close we might be to it,” said Miles Shipside, director of Rightmove, who commissioned the research. “Greater new investment in the rental sector would ease the pressure on rents but, currently, the rental supply tap continues to produce a drip rather than the steady flow that the market really needs.”

Around the country the amount of income that rent accounts for is highest in the South East (41%) and London (40%) and lowest in Scotland (35%) and the North East (36%). In London, 16% of tenants spend more than 60% of their net income on rent. Rightmove’s recent Rental Britain report, produced with Savills, predicted that one in five households will be privately rented by 2016.

“While the rental bubble is unlikely to deflate as there is no readily acceptable alternative to the rented roof, it does appear to be approaching a limit in some areas,” added Shipside. “Agents report that the seemingly incessant demand is causing rental price pressure to spill over into other previously less sought-after areas and some tenants are attempting to negotiate lower rent. It is an early warning sign of some over-heating and, as well as raising demand in cheaper locations, it will force some to find alternatives such as stay with parents or squeeze more people into smaller spaces.”

Meanwhile, Any Friend of Ours, a private online membership club where second homeowners can rent their properties to recommended and trusted individuals has launched. Anyfriendofours.com aims to overcome the concerns that make second homeowners reluctant to risk renting-out their property such as the fear of it being damaged, or the hassle of chasing or negotiating payment. Membership is limited to homeowners, their invited friends and family only and is free to join.

Useful web sites for more information

• Independent Property Search Engine
• Independent House & Home section

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• Pacificweather

  A really interesting article. In 1970 my rent was 42% of my take home pay. I had a wife and child and feared being trapped in sub standard rented accommodation for ever. So I saved every penny I could and two and a half years later I had the ten percent deposit for a sub standard house. So if average rent is only 38% of take home pay now why is it so difficult for young people to buy a property?

  Admittedly, my employers was prepared to exaggerate my income slightly to so I could borrow 3 times my income and I had to pay an insurance premium to the value of 10% of the purchase price. This gave me a salary of £60 per week, equivalent to about £60,000 a year now which would buy a property of £180,000 in today’s money.

  So where is the problem? Is it that so few young people have a combined salary of £60,000 or that they won’t save? My son managed to buy a house so this must be a very recent (last 10 years) change of circumstances.

• ambuscade

  Some figures and closing with a plug for a website? It’s all very empty academic. Us renters are screwed.

• Dorothea

  At what point in history was this not a problem?  I must have blinked.

• Kugelschreiber

  They’d like to buy?  Then they’d like to become MORTGAGE SLAVES then wouldn’t they, to further overspill the coffers of the money lenders & empty their own pockets as the price of houses continues to rise.