New research by Zoopla has found that the average rent has increased by 10.4% in a year, the 5th month of double-digit growth.
53% of tenants say their rent has risen in the past six months with renters spending 28% of their income putting a roof over their head – the highest in ten years.
The data also shows that availability of property is down a third from the five-year average.
Sarah Coles, Head of Personal Finance at Hargreaves Lansdown said “Renters are spending more of their income keeping a roof over their head than any time over the past decade. After 21 months of outpacing earnings, they now devour an eye-popping 28% of people’s incomes, pushing more households closer to the edge financially.”
“It’s horrible for all renters, and according to the ONS, fewer than half say paying the rent is still easy. However, it’s causing enormous problems for those whose finances were tighter in the first place – including those on lower incomes. Some 15% find it very difficult to pay the rent – and the proportion falling behind has doubled in six months from 4% to 8%.”
“In London, life is even harder for tenants, as rents are up 13.5% to over £2,000 a month. Rent now makes up 40% of income in London. Forget flat whites and avocados, at this level it becomes increasingly difficult to pay the rent and cover the bare essentials before running into financial difficulty.”
“The problem is the massive imbalance of supply and demand, as landlords continue to pull out of the market, while renters keep flooding in. There’s every sign that this trend is set to continue. Plenty of landlords are wrestling with higher mortgage costs, and can’t make the maths work any more, so they’re selling up. The trend is particularly striking in London and the South East, where more expensive property means mortgages are larger – just over half of Landlord sales are in these regions. Higher mortgage rates for longer is going to force more landlords to sell up.”
“Zoopla is keen to highlight that this isn’t a sudden flood of people leaving the market, it’s a long and steady outflow. Right now, more than 1 in 10 (11%) of properties for sale on Zoopla have been rented out previously. Before the pandemic, half of these homes were returning to the rental market, now just under a third do.”