New research by Landbay has found that tenants now spend more than half their income on rent. The Landbay Rental Index, powered by MIAC, found that rental payments now account for over half (52%) of the average take-home pay of £1,471 for people living and working outside the capital. The average rent paid in the UK outside London hit £761 in March, taking annual growth to 1.21%.
However, those living in the capital face an even tighter squeeze. Average rents in London remain more than double the average for the rest of the country at £1,879, despite rental growth only recently returning to positive territory.
Workers in London take home an average of £2,108 a month, so for single-earner households that means that the average monthly rent for a property is 89% of the average take-home pay. However, most London households must rely on multiple earners or those with a high-income.
If London workers are willing to move further afield to save money, they can expect to spend a far lower percentage of their income on rent, closer to the national average. Average rents in the South East now stand at £1,053, 58% of the average income of £1,817 of those living in the region. Another option is East England, where average rents are 55% of take-home pay.
On the other end of the spectrum, those working and living in North East see the lowest percentage of their salary going towards rent, where just 41% of the average income of £1,350 is handed over to the landlord each month.
Landbay CEO and founder John Goodall said: “Rents have continued to rise over the last five years, increasing by 9% across the UK since March 2013 and by 7% in London – with monthly payments remaining a burden on those struggling to save. Tenants saving up for a house face a triple challenge with more and more of their income spent on rent, partnered with trying to catch up with the pace of house price inflation and record low-interest rates limiting their ability to save money.”