The cost of renting a home in the UK is hitting tenants harder in the pocket, with just over 28% of salaries – before tax – going on rent, as opposed to 27% over the last 10 years.
Even a 1% increase can have a significant impact on household budgets, especially in the current cost-of-living crisis, while there has been staggering rise of 10.4% on the average price for new lets across the past 12 months. Affordability of renting is now at its worst for a decade, with Richard Donnell, the executive director at Zoopla, saying there are now signs of financial “stress” on tenants, particularly those on low incomes.
“The impact of higher rents is not uniform with those on low incomes bearing the brunt, with increasing signs of stress,” said Donnell. “
READ MORE: Mortgage crisis could be solved by 25-year fixed rates, says Michael Gove
Even those with a bit of money are struggling to afford to rent houses in the area they want, with Chris Ward telling the BBC: “I don’t have a car, I don’t go on vacations, I can’t save for property.”
He and his girlfriend have a combined budget of £1,750 a month, but even they can’t find anything affordable in London. He added: “There is necessary support for the poorest, but young workers are also struggling now.”
In London, rents account for 40% of gross earnings, the highest in the UK. The increases have been sparked by the rising mortgage rates faced by landlords, as well as higher demand for properties than the number made available.
In Bristol, average rents had risen by a staggering 52% across the last 10 years, with wages increasing by just 24%. Local mayor Marvin Rees described the situation in Bristol as the “Wild West of the rental market”.
He said: “I recognise there is complexity, but what we certainly need is intervention in the rental market.”
In April, rent in London was 13.5% higher than a year ago, in Scotland it was 13.1% higher, and the North West of England saw a 10.5% increase.
Zoopla have also revealed that there are 20% to 40% fewer homes to rent in most areas of the UK than there were before the coronavirus pandemic, while there are a lot more tenants than has been seen on average over the last five years.
Across the UK, the supply of rental properties has fallen by 28%, but demand has risen by 57%, while in Scotland demand is now 86% higher than this time a year ago, while supply has fallen by 18%.
Homeowners have been hit by rising interest, and mortgage rates, and that has spilled over into the buy-to-let market – which often sees even higher mortgage rates.
