Credit, Collections & Insolvency News
Housing tenants face having to find an extra £1,000 this year to cover higher rent and essential bills to fund cost of living rises according to research by Hamptons.
The company’s Monthly Lettings Index found that tenants will end up paying more than ever on rent and bills, with an average of 54% of household income set to be spent on these in 2022, an increase from the 52% figure in 2021.
Last year’s rental growth meant the average household spent 42% of post-tax income on rent alone. This is the highest percentage rise since the Monthly Lettings Index began in 2010.
Private tenants spent a collective total of £62.4 billion on rent last year, up from £58.2 billion in 2020. The increase in 2022 will amount to an extra cost of £4.6 billion.
The research predicted that in 2022, tenants in the South East will likely pay more. Last year, 64% of the average household income in the region was spent on rent and bills – the highest in the country. This is now forecast to hit 65% by the end of the year.
Tenants in the East Midlands are set to be hit the hardest, with households in the region currently spending a higher share of post-tax income on bills – 16% – compared to others. There, overall rent and bills could increase from 56% to 58% of post-tax income by the end of 2022.
Overall, rental growth slowed across the UK for the sixth consecutive month. The average cost of a newly let property rose 6.7% in February, with growth down from the 7% rate in January and the peak of 8.7% seen in July 2021.
Hamptons Head of Research Aneisha Beveridge said “Financial pressures are raining down on households, but while last year it was rental growth that ate into tenants’ incomes, this year it’s more likely to be energy costs.”
“Rental growth is slowing as affordability pressures bite and we expect rents across Great Britain to end the year 2.5% up on 2021, down from 7% today. However, even if household incomes rise by the forecast 3.75%, it won’t be enough to fully offset rising utility bills and tenants, in particular, will feel the pinch.”
