According to the most recent Rental Index from Landbay, young tenants are spending one-third of their monthly take home pay on rent.
Those residing in a three-bed property spend 30% of their pay on rent, while those in a two bed spend 39% on average. For those living alone, rental payments hit them hard in the pocket, with them spending an average of 69% of their take home pay on rents!
For tenants aged between 18-39 renting alone, 69% of their monthly post tax-income of £1,447 is spent on £1,012 worth of rent.
For two people sharing a house, overall rent of £1,152 amounts to 39% of each tenant’s income.
Rents have continued to spiral in the last five years, rising by 9% across Britain since April 2012. London has seen rental growth of 8% over the same period. This of course is impacting on those struggling to save for a deposit, despite the pace of rental growth slowing from August 2015, from 2.66% and 0.82%.
Despite rents beginning to show signs of stabilising for young people, spending such a high percentage of their take home pay on rent leaves them little to play with for essentials, never mind for savings.
Millennials spending over one-third of their take home pay on rent
John Goodall, CEO and founder of Landbay noted: ‘For intermediaries, this generation is the future of their client base, a generation who will face a tough financial journey.’
‘Whether these millennial tenants are renting as a stepping stone on the way to home ownership – or in some cases choosing to rent for life – this generation are relying on a well-served buy-to-let market to ensure rental growth doesn’t become unbearable. What is now needed is some firm Government commitment to improving standards, affordability and supply of rental properties,’ he continued.
Concluding, ‘Institutional investment and the subsequent growth and professionalism of the private rental sector are already helping control rental growth and improve living standards for renters, so we hope to see some clear plans outlined in this month’s party manifestos ahead of the General Election in June.’