Nearly two thirds of respondents in the Knight Frank UK Tenant Survey, one of the largest of its kind ever carried out, said this was their main concern when compared to location or space in the property.
Around a quarter said that location was the most important factor when choosing a rental property, while 10% said that the size of the property was the key consideration.
Those earning between £30,000 and £35,000 a year were slightly above average in their concern about affordability with 67% citing it as an issue but moving up the income scale location becomes a bigger priority, with 39% of those earning between £50,000 and £60,000 a year citing this as their main concern.
When asked how much of their gross income they would be willing to pay on rent, the average response was 40% but there are some significant regional variations. Only 17% of those in the North East would spend more than 40% of their salary on rent, but this more than doubles in the South West, to 32%.
In London and the South East, around a fifth, 22% and 20% respectively, of respondents are prepared to pay between 40% and 50% of their income on rent, while 11% of Londoners are prepared to pay more than 50%, underlining the cost of renting in the Capital.
Some 23% of those aged under 25 are also prepared to pay between 40% and 50% of their monthly pay on rent, highlighting the relatively weaker earning power of those just starting out in their careers against the cost of renting a property.
There is also evidence of a rent ‘ceiling’, even for those on higher earnings. While a third of those earning between £20,000 and £25,000 a year said they would pay a maximum of between 30% and 40% of their income on rent, only 24% of those earning between £45,000 and £50,000 a year said the same. ‘Even if their income rises, there is still a natural limit to what tenants are prepared to pay on rent,’ the report says.
After affordability is factored in, it is clear that location plays a crucial role. Some 55% of respondents said that having a rental apartment or house close to where they work or study was important, with more than a half also identifying proximity to transport links, shops and other amenities as a priority.
Breaking down the results by age, it is clear that young professionals value living close to their office, fitting with the trend for demand for city centre private rented sector accommodation.
Some 73% of those under 25 and 66% of 25 to 34 year olds said that when looking for a rental property, being within reasonable proximity of where they work and study was a key priority.
Around 58% of those aged under 35 also said that being close to transport links was important, compared to the average of 53%. This underlines the urban nature of the growth in the private rented sector, and suggests that this trend will continue.
The majority of tenants surveyed, 78%, would like to live within a kilometre or closer to their nearest transport link, be it a railway station or bus stop, with 34% saying they would like to live within 500 meters or roughly a six minute walk away.
Purpose built rental blocks can come with a range of extra facilities not generally available to those living in alternative rented accommodation, such as a concierge or in-house cleaning service and the survey found tenants would be willing to pay for some services.
For example, tenants said they would consider paying a slightly higher rent for in such accommodation. Some 50%, the highest proportion, said that they would pay a rental premium for allocated off-street parking while 27% said they would pay a higher rent for a fully furnished flat. But there was a significant age difference. More than 53% of under 25s, and 32% of 25 to 34 year olds said they would pay higher rent for this.
Across earnings brackets, 31% of those earning between £25,000 and £34,999 a year said they would pay extra for a furnished property, falling to 14% for those earning between £45,000 to £49,999 a year. However the proportion rises again for those earning £100,000 plus, with 29% of these respondents saying they would pay extra.
Around a third of respondents said they would pay a higher rent for a gym in or close to the building.
The survey suggests that more people would rather pay a slightly higher rent for inclusive parking than pay an extra charge each time they use an allocated space.
Around 40% said they would pay an extra charge to use additional storage facilities, while a third said they would pay an extra charge for in-house cleaning of their flat.
The report says that there is a clear link between the availability of mortgage finance and the rental sector. When asked why they were renting, most tenants said that saving for a deposit for a home loan was a factor. But this may only be a part of the story. Some 32% also said that they liked the flexibility of living in the private rented sector and/or they didn’t want a mortgage.
This seems to reflect the rising trend of those who like the flexibility of renting, especially among the younger professionals working in urban locations. Well over a third, 37%, of under 25s said that renting suited their lifestyle.
When asked how long they were likely to stay in the rental sector, 24% said they were unlikely to ever move out of privately rented accommodation.
The research also found that transparency is the most prized quality for a lettings agent among tenants. Some 54% of respondents said that being clear about charges and the deposit was one of the three most important factors, scoring well above the actual fees charged by the agent (42%).
‘This gives some indication that tenants understand the competitive nature of the market when it comes to fees, but value being able to clearly determine what those fees are,’ the report says. Speedy response times to queries and being easily contactable are the next most important qualities.
Being easy to contact should be the key priority for property managers, the survey suggests. Some 46% of tenants said that being easily contactable by phone and email is the best quality, followed closely by being committed to responding to any tenant enquiries within 24 hours.
