Rising Rents: Putting a squeeze on tenants
This is a legacy post from the findaproperty.com blog which is now maintained as an archive within the Zoopla blog. Links have been preserved.
There’s been a lot of talk over the past few weeks about the impact of rising rents on British households. Last week’s Shelter report into renting made for disturbing reading – especially its findings about affordability in relation to private sector housing.
Now, new figures from the quarterly FindaProperty.com Rental Index are shedding more light on the squeeze as average asking prices of a home to rent climb to their highest level ever.
Here’s the detail: the average monthly rent rose by 1.6% in September, taking the typical asking price of a rental property to £890 per month, the highest price ever recorded by the FindaProperty.com index.
This increase means that a typical renting household can expect to spend almost half, or 46.2%, of its monthly net earnings on accommodation.
As you’d expect, households in London are under massive rental pressure. While the capital has the country’s highest take-home earnings (at £2,721 per household, per month, according to Department of Work and Pensions figures), the typical monthly rent has now passed the £2,000 mark (£2,075), which means the cost of renting now accounts for three quarters of average monthly net earnings (76.3%).
The most affordable place for renters is Yorkshire and the Humber where average asking rents now accounting for 35.3% of average household net earnings. Wages in the region are 39.1% lower than in the capital, but this is more than offset by the country’s best value rental accommodation – the average rental property is on the market for £584 per month.
These increases are alarming. But they point to a wider problem in the housing market and are being directly impacted by a bottleneck in the first-time buyers’ market, which is having a knock-on effect on all other levels of the property ladder who are then “stuck” where they are.
The result is that a place of one’s own is becoming simply unfeasible for a lot of people – young and not so young – and rising rents and curtailed mortgage lending is forcing more of us into shared rental accommodation: a living situation we’re staying in for longer.
The other side of the coin is that landlords are obviously benefitting from a hot rental market – and the latest FindaProperty.com rental index has found the average rental yield rose to 4.9% – the highest ever level across the country in September.
Landlords are also letting their properties faster. At the moment it takes nine days less than it usually has over the past few years for a landlord to find a new tenant, meaning supply is still lagging behind demand, and prices are likely to continue to rise in the near future.
See rental affordablity in your region:
|Region||Average rental asking price||Average monthly wage income*||Rent to earnings ratio|
|South East England||£1,163||£2,343||49.6%|
|South West England||£855||£1,748||48.9%|
|North West England||£641||£1,640||39.1%|
|East of England||£819||£2,102||39.0%|
|North East England||£587||£1,571||37.4%|
|Yorkshire & The Humber||£584||£1,657||35.3%|
Read the latest full FindaProperty.com Rental Index: http://blog.findaproperty.com/renting-letting/findapropertycom-rental-index-october