Rent bills eat up more of tenants’ income than ever before
Estate agency giant Hamptons says the amount renters are paying is now nearly half their total income on average.
Tenants are now spending more of their income on rent than previously recorded, new research from Hamptons shows.
Privately rented households use 44% of their income after tax on rent, up from 41.6% in October 2020 and 39.2% 10 years ago.
London remains the least affordable region, with the average rent taking up 62% of
each household’s income after tax. However, weaker rental growth
in the capital means that this has increased by just 1% since October 2020, the third
smallest rise in the country.
The average rent on a newly-let home rose to £1,204 pcm in October, up £80 or 7.1%, costing tenants an extra £960 each year, according to the latest Hamptons lettings index.
Biggest increase
Since the eve of Covid (Jan 2020) rents have risen 19% across Great Britain, equating to an extra £2,351 a year for tenants. There’s been more rental growth since the beginning of Covid than in at least eight years prior.
The South West has seen the biggest increase, with rents up 32% or £265 per month.
Aneisha Beveridge, head of research at Hamptons, says: “The good news for tenants is that rental growth has slowed from its summer double-digit peak, and looks likely to settle around the 5-6% mark by the end of the year.
“The cost of servicing a 90% LTV mortgage has risen 65% over the last year, meaning tenants are now spending a similar proportion of their income on rent (44%) as they would on a mortgage (36%).”
