More than a third of Brits’ incomes spent on rent

Tenants in the UK are now spending more than a third of their income on rent, with rental prices coming it an average of £868 a month.

You can compare credit cards with Propertywide.

The research, conducted by Find A Property as part of their latest Rental Index, has found that rental prices have increased by 1% in a year-on-year comparison. However, the current figure is still lower than the record high of £890 in September 2011.

The average net income for UK households stands at £27,242 a year, 38% of which is spent on rent – bringing the yearly rent bill to a staggering £10,416.

“Average rental prices peaked in September of last year but have come down since then, most likely as a result of more properties coming onto the market,” said Samantha Baden, property analyst at Find A Property.

“Overall, rental supply increased in the first quarter of the year, especially for bigger properties,” she added.

Tenants in London face an even larger bill, spending 71% of their net income on rent. Average annual net income in London is £36,384, with those in the Capital spending an average of £25,824 a year on rent.

The rise in rental prices and the turbulent state of the UK’s economy has also triggered a fall in lease lengths to a new low of 4.8 years. This has dropped considerably from a figure of 6.2 years in 2007.

“Smaller homes remain in limited supply and as a result, individuals and couples are still facing record asking prices for smaller flats and therefore spending a significant proportion of their overall household income on this,” added Ms Baden.

“This is particularly pertinent in areas like London where demand is high, which is why tenants looking for more affordable rental property should consider the impact of location as well as size.”

You can compare credit cards with Propertywide.

Posted by: WarrenWilson Categories: Finance Tags: , , 4 Comments

4 Responses to More than a third of Brits’ incomes spent on rent

  1. avatar Grant says:

    …demand is high … smaller homes limited supply … ridiculously high rent for struggling(?) youngsters. Try something new and move out of London. Sure the entertainment is where its at, but then there should be no complaints if such a huge number of people from different countries flock to London and don’t con sider other areas. I bought in Essex and couldn’t rent for what I pay on my mortgage. Wake up people!

  2. avatar Bex says:

    Good article, but I think the statistics you use are painting an unrealistically positive picture. I believe the rental market is primarily younger people and low-income families (since people over ~35 were able to buy houses before the boom). Look at the average young person’s wage of £15k – £25k gross.

    A typical graduate on ~£24k pays full tax and NI, plus student loan repayments, so their net income will be around £16k, which is £1200pcm. Although the average rental price is £868, the real bottom end of the market is still ~£600pcm for a small house and ~£400pcm for a “studio flat” (i.e. crumby bedsit) outside London. So a young person can easily spend half their net income or more on rent.

    Then there’s the increasingly volume of “admin” and “re-referencing” fees that letting agents have become fond of, and the cost of relocating every ~2 years because landlords and letting agents don’t seem to like long-term lets (and frequently try to keep your deposit). It was those costs that were particularly crippling and demoralising when we were renting. Thank goodness we still saved some cash and discovered the joy of repossessions!

  3. avatar Jane says:

    Just bought a house on buy to let to secure a small pension for me and my husband.. Yes we are landlords and no we don’t have a huge resource of money and we don’t have big income. I’m sure there is plenty of landlords that have lots of money and lots of houses to rent out and make lots of profit. But also I’m sure there is plenty of people just like us, who are just trying to secure a better retirement. What we do have is the joy of uncertainty of if the tenants will pay the rent on time so we in turn can pay our mortgage. All the hassle of maintenance and finding descent tenants. Our first tenants left the house filthy destroyed new carpets and basically had no respect for the property. I have spent two weeks repainting the entire house, cleaning carpets and basic cleaning. I can only claim a small amount back from tenants deposit. No where near what I had to pay out in my cost’s and time. I am forever an optimist and after reducing the rent by £40,00 a month for my new tenants, because they are saving for there own home. My point is not all landlords are bad, letting agency are probably a different matter but not all tenants are brilliant either. I hope my tenants appreciate all my hard work, after all they had seen the house before my improvements and had no idea I would be making the house even nicer.

  4. avatar Kernow says:

    When I was first married, we spent £6 per week rent out of £30 income on housing. I wanted to own my own home,so I joined a firm that would give me 105% mortgage on a £3000 house. The house was in need of total refurbishment. Got a 100%government grant to convert the house in two flats. No repayment provided that we lived in the house for 5 years. Mortgage payments were, of course, tax deductible. I worked an average 70 hours, 51/2 day week, but my wife did not until children at Secondary School. But we got maarried allowance for her not working. So, there was a time after the austerity of the wartime and rationing years, when it did seem that life for workers improvede. I would say that this period of decency ended early in the 70s when the unions and pension funds (viz. ordinary people) owned more than half the LSE. From that point the establishment has consistently and ruthlessly created a nation of slaves.