Rent devours highest proportion of income in a decade

rents grow

The cost of rent now accounts for 28% of people’s incomes, stretching more households financially.

Rental growth currently sits at 10.4% in a year, with half (53%) of tenants saying there’s been an increase in the past six months, Zoopla’s UK Rental Market Report shows.

A shortage of rental properties combined with higher energy and mortgage costs are behind the rise.

The availability of property is currently a third lower than the five-year average.

Sarah Coles, head of personal finance, Hargreaves Lansdown, said: “It’s horrible for all renters, and according to the ONS, fewer than half say paying the rent is still easy.

“However, it’s causing enormous problems for those whose finances were tighter in the first place – including those on lower incomes. Some 15% find it very difficult to pay the rent – and the proportion falling behind has doubled in six months from 4% to 8%.

“In London, life is even harder for tenants, as rents are up 13.5% to over £2,000 a month. Rent now makes up 40% of income in London. Forget flat whites and avocados, at this level it becomes increasingly difficult to pay the rent and cover the bare essentials before running into financial difficulty.”

She added: “The problem is the massive imbalance of supply and demand, as landlords continue to pull out of the market, while renters keep flooding in. There’s every sign that this trend is set to continue.

“Plenty of landlords are wrestling with higher mortgage costs, and can’t make the maths work any more, so they’re selling up. The trend is particularly striking in London and the South East, where more expensive property means mortgages are larger – just over half of Landlord sales are in these regions. Higher mortgage rates for longer is going to force more landlords to sell up.”