Tenants paying nearly 30% of their wages in rent, says Zoopla
Portal says tenants being forced to find smaller homes, move to cheaper areas or share a property with other tenants to reduce rent paid.
Rents are at their highest level for a decade at 28.4% of takehome pay, Zoopla’s latest quarterly Rental Market Report reveals today.
The portal says that faced with the unaffordability of rents and scarcity of supply, renters are being forced to rent smaller homes, move to cheaper areas or share a property with other renters to reduce costs.
Despite annual UK rental growth currently at 10.5% compared to 12.1% a year ago, renters can still expect to pay an extra £1,320 annually – or £110 per month.
Meanwhile, Scotland has overtaken London as the area with the fastest rental growth at 12.7% due to the introduction of rent controls in September 2022 – as properties become vacant landlords can reset the rent to the full market rate.
ENDLESS CYCLE
Richard Donnell, Executive Director at Zoopla, says: “The rented sector is stuck in a seemingly endless cycle of low supply and strong demand which has kept rental growth in double digits for 18 months in a row.
“Scotland is the hottest rental market with rents up almost 13% over the last year as landlords adapt to new rent controls over the last year.
“Rents are set to rise 9% over 2023 with the pace of rental growth to be shaped more by the affordability of renting, and how renters adapt to higher rents, than major shifts in supply or demand.
“More renters looking to share accommodation could well support rental growth into 2024 with no end in sight for the shortage of homes for rent.”
ZERO DEPOSIT
Zoopla’s research comes as analysis of HomeLet and ONS data by Zero Deposit boss Sam Reynolds, also published today, reveals renters in the UK now have to spend nearly two thirds of a full month’s net income to pay the deposit on a new property.
With average monthly rent now £1,243 a standard five-week deposit would be £1,434. But the average UK worker only takes home £2,228 per month – meaning that they would have to pay 64% of a single month’s income just to pay their tenancy deposit when moving into a new rental home.
The average monthly income for a UK male is currently £2,590 but women average just £1,858 – meaning men would require 55% of monthly income to cover the cost of a rental deposit and women 77%.
MARKET AFFORDABILITY
Cleaners, hairdressers and chefs are the worst hit professions when it comes to rental market affordability.
The average cleaner’s income is £969 per month which means the average tenancy deposit comes in at 148% of single month’s pay, while the cost of renting sits at 128% of their monthly earnings
For hairdressers, with an average monthly income of £1,103, a rental deposit equates to 130% of their monthly income, with rent requiring 113%.
And even high earners such as pilots (34%), doctors (36%) and lawyers (40%) would have to spend over a third of their monthly income on a rental deposit.
Sam Reynolds, Chief Executive of Zero Deposit, says: “Renters up and down the country are facing an incredible financial challenge at the moment, especially those with lower incomes who are undoubtedly struggling with the high cost of living.
And he adds: “This simply isn’t financially viable for the average tenant.
“As a result, many are unable to move at the pace that the current rental market requires, leaving them in a cycle of being stuck in a property they are keen to leave, forced to borrow to find the deposit or effectively out in the cold and without a home.”
One fundamental piece of information missing in this article is the impact of property licensing on the market. In Bristol and other cities with licensing schemes, hundreds of properties are unlicensed, meaning that they can only be rented to couples or families. This penalises tenants and landlords, as a two-up two-down property rented to a couple can easily be rented to four sharers, as explained in my recent article: ww.renthappily.co.uk/news/how-to-increase-profits-and-reduce-rents