Around 30% of tenants are spending over 50% of their net income on rent, the latest figures suggest.
The survey of nearly 7,000 tenants shows that the average cost of renting accounts for 38% of tenants’ take-home pay. It also indicates that the gap between demand and supply is wider than a year ago and that the majority of tenants believe that rents will be higher this time next year. The proportion of those who would like to buy but are happy to rent in the meantime has risen slightly to 32% but there is still a majority of ‘trapped renters’ who
would like to buy but cannot afford to do so (56%).
“While the failure of rental supply to keep pace with tenant demand persists, fuelled by the needs of tenants unable or unwilling to buy, our research raises some interesting questions about how high the affordability ceiling is and how close we might be to it,†said Miles Shipside, director of Rightmove, who commissioned the research. “Greater new investment in the rental sector would ease the pressure on rents but, currently, the rental supply tap continues to produce a drip rather than the steady flow that the market really needs.â€
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Around the country the amount of income that rent accounts for is highest in the South East (41%) and London (40%) and lowest in Scotland (35%) and the North East (36%). In London, 16% of tenants spend more than 60% of their net income on rent. Rightmove’s recent Rental Britain report, produced with Savills, predicted that one in five households will be privately rented by 2016.
“While the rental bubble is unlikely to deflate as there is no readily acceptable alternative to the rented roof, it does appear to be approaching a limit in some areas,†added Shipside. “Agents report that the seemingly incessant demand is causing rental price pressure to spill over into other previously less sought-after areas and some tenants are attempting to negotiate lower rent. It is an early warning sign of some over-heating and, as well as raising demand in cheaper locations, it will force some to find alternatives such as stay with parents or squeeze more people into smaller spaces.â€
Meanwhile, Any Friend of Ours, a private online membership club where second homeowners can rent their properties to recommended and trusted individuals has launched. Anyfriendofours.com aims to overcome the concerns that make second homeowners reluctant to risk renting-out their property such as the fear of it being damaged, or the hassle of chasing or negotiating payment. Membership is limited to homeowners, their invited friends and family only and is free to join.
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