Rent paid by tenants doubled in last decade
Tenants in Great Britain paid a record £51.6bn in rent in 2017, more than twice what they paid in 2007 and a £1.8bn increase on the previous year.
The reason for this surge in rental spend is two-fold – boosted by both rising rents and an increase in the number of households renting.
Who is paying?
For the last 11 years millennials (born 1977-1995) have been paying the majority of total rent in Great Britain, but their proportion of the overall spend is shrinking as they start to buy houses. Now generation Z (born after 1995) is coming of age and taking up the rental baton.
In 2017 millennials paid 59% of all rent, a total of £30.2bn, down from a peak of 64% in 2015 when they paid £31bn.
While together the two youngest generations make up the largest proportion of the rental market, older renters still make up a significant proportion of tenants.
Last year baby boomers paid £5.5bn, 10% of all rent, the same as generation Z.
Johnny Morris, research director at Countrywide, said: “More people joined the rented sector and average rents increased, meaning 2017 saw the highest total rent bill so far.
“As millennials age, more are becoming homeowners, so the total amount they’re paying in rent has started to drop. But the Generation Rent title still applies. Any fall will be much smaller and slower than seen by previous generations as less become homeowners.”
Where is rental growth rising?
Rental growth has accelerated in London by 3.3% year-on-year, while Scotland, the South East and the South West saw growth rates slow. The North East was the only region to see rents fall.
“For the second month running rental growth in London has outstripped the rest of the country,” said Morris. “Stabilising rents in central London alongside rises everywhere else in the capital has pushed the rate of rental growth to the highest level for 22 months.”
The overall rate of rental growth in January 2018 remains unchanged from the end of 2017 at 2.4%.
Excluding London, average rents across Great Britain rose 1.9%, compared to annual growth of 2.0% in December.