Survey suggests tenants in UK cannot afford further rent rises

Further rent rises in the private rented sector in the UK could stretch the ability of tenants to pay as they are already under financial pressure, a new analysis report suggests.

It is widely expected that rents will continue to increase in 2017 with a change in tax on landlord income due to be introduced set to be a catalyst for rent hikes.

Now research suggests that 16% of private renters cannot afford even a 1% increase in monthly rent, 26% cannot afford an increase of up to 3% in monthly rent and 42% cannot afford an increase of up to 5% in monthly rent.

The YouGov survey for property classifieds site The House Shop, asked people to estimate the minimum percentage that their monthly mortgage or rent payments would have to increase before they became unaffordable.

While many renters indicated that they are already paying the upper limit of what they can afford, home owners with mortgages were much more likely to be able to withstand smaller increases in their monthly payments. Just 3% saying they could not afford an increase of up to 1%, compared to the 16% of private renters who said the same.

Mortgage holders were more able to absorb larger increases in monthly payments, with 24% saying monthly mortgage payments would have to increase by more than 20% before they became unaffordable, compared to just 7% of private tenants who said the same of their monthly rent payments.

Across both mortgage holders and renters, some 22% said they could not afford an increase of up to 3% in their monthly housing costs and 18 to 24 year olds were least likely to be able to absorb higher monthly increases, with just 6% selecting the more than 20% bracket, under half the average for all respondents. In fact, 16% of this age group said that even an increase of up to 1% would not be affordable.

‘We all know that the rental market is highly competitive right now, and tenants’ budgets are already stretched to breaking point. Therefore the prospect of any further rent rise is a real concern, and as our research shows, even a relatively minor increase in monthly rent payments could push tenants over the edge,’ said Nick Marr, the firm’s co-founder.

‘The fact that 16% of renters said that they would struggle to afford even a 1% increase in monthly rent is especially worrying as this could equate to as little as £7.79 extra per month based on average UK rents,’ he pointed out.

‘The results also show that 27% of renters would struggle to afford an increase of up to 3%, or a potential monthly increase of £23.37. These figures are totally at odds with the various surveys and research papers showing that the majority of landlords are planning to raise rents on their tenants within the next 12 months,’ he added.

He believes that this demonstrates that there is a ticking time bomb in the Private Rental Sector. ‘With the number of people renting from private landlords already at a 30 year high we could quickly find ourselves in a very precarious position with wide ranging consequences for both tenants and landlords up and down the country,’ said Marr.

Green Party member of the London Assembly Sian Berry, who has been campaigning for better standards in the private rental sector and stronger renters’ rights, said recent research also shows that rent increases is the most common problem reported by renters in the last three years.

Meanwhile, Dan Wilson Craw, policy manager at Generation Rent, warned that landlords attempting to raise rents will be met with resistance from tenants. ‘Rents are already taking a huge bite out of tenants’ incomes, so any attempts to raise them further will be met with resistance,’ he said.

‘With only a third of privately rented properties mortgaged, tenants should be prepared to negotiate hard on any attempts to raise rent, and remember that there are many landlords out there who won’t be affected by the tax changes,’ he added.