Rents rocket to over half of take-home pay
It said that rent now accounts for over half (53%) of the average take-home pay for people living outside the capital (£1,425).
This is because take-home pay has fallen 2% in the last month, at the same time as rents went up. However, if a tenant lives in a one-bed property, where rents are a more modest £592, the proportion they spend on rent drops to 42% of take-home pay.
John Goodall, CEO and founder of Landbay, said: “Outside the capital, rents continued to grow across the country in 2016, a trend we expect to continue into the coming year. Demand for rented accommodation will remain robust, as the myriad threats of rising house prices, falling real incomes and rising inflation affect the ability of aspiring homeowners to get their foot on the housing ladder and save for a deposit.”
Priced out of the capital
London rents fell slightly to £1,882 in December, but with take-home pay of just £1,967 per month those on an average incomes would need to spend three-quarters of it (74%) on rent, unless they split the cost.
And that’s what many do, said Landbay, as most London households must rely on multiple or high income earners in order to rent.
Goodall said more needs to be done to support tenants: “The government may have just committed £7bn to building an additional 200,000 affordable starter homes, but supply across all tenures is still too low. The buy to let market has become a ‘catch all’ for a forgotten generation of house hunters, for those who cannot, or choose not to, buy a property outright. All eyes will now be on the upcoming Housing White Paper, which may be the best opportunity we’ve had in recent years for significant change.”