New research on the so-called Generation Rent has revealed that UK rents amount to almost half of tenants’ average take-home pay.
The investigation was undertaken by the University of Bristol, on behalf of financial services innovator Momentum UK. Data from the report shows that the typical renter is financially worse off than someone who owns their own property.
Further analysis of the report shows that private renters take fewer holidays and are able to save less money. In addition, they are more likely to make cutbacks due to larger affordability restrictions.
Momentum UK’s Index shows than 31% of private renters have less than £100 in savings. This is in comparison to 15% of people with a mortgage on their home. 37% of mortgage borrowers view their income as sufficient, in comparison to 16% of private renters.
Researchers revealed that renters send around half of their salary to their landlord every month. This is only likely to rise, given the fact that many landlords will be left with little alternative to increase rents to recoup losses caused by recent tax alterations.
These include alterations to stamp duty, scrapping the wear and tear allowance and upcoming changes to mortgage interest tax relief, scheduled for next month.
Tenants are spending half of their pay on rent
Over four million households in the UK now rent from a private landlord, with this figure almost doubling in the last ten years.
Dominic Baliszewski, director of Consumer Strategy for Momentum UK, commented: ‘The average private renter loses around half of their pay cheque on rent at the beginning of each month, and for those living in London, it can be even higher. This not only limits their ability to save, but also means they have to cut back on expenses such as gym memberships, holidays and socialising just to get by.’
‘With home ownership in decline, the number of people facing these financial challenges and seeing their living standards fall is only going to grow. That’s why it’s so important that the government delivers on the pledges made in its housing white paper,’ he added.