Tenants outside London spend more than half their take-home pay on rent
The average rent in the UK paid for a home outside the capital reached a record £750 per month in December, with tenants now paying more than half of their take-home pay on rent, new research has revealed.
The latest Landbay Rental Index found that rent now accounts for 53% of the average monthly take-home pay of £1,425 for tenants who live outside the capital, while average rents across the UK (excluding London) went up by 2.04% in 2016. In contrast, take-home fell across the UK by 2.3% between January and September 2016.
While rent averages out at £750 a month across the UK (excluding London), the proportion of rent to take-home pay will be less for those in smaller properties. For example, tenants will pay £592 a month forto a one-bedroom property, which equates to 42% of take-home pay.
Londoners pay 74% of take-home pay
In London, where average rents are £1,882 a month - more than twice the UK average -– and where average take-home pay is £1,967 a month, the monthly rent for a one-bedroom flat for a singleton is 74% of their take-home pay.
However, Landbay points out that ratios in the capital are skewed by more exposure to international investments.
John Goodall, chief executive and founder of Landbay, says: “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.”
An increase in the general level of prices that persists over a period of time. The inflation rate is a measure of the average change over a period, usually 12 months. If inflation is up 4%, this means the price of products and services is 4% higher than a year earlier, requiring we spend and extra 4% to buy the same things we bought 12 months ago and that any savings and investments must generate 4% (after any taxes) to keep pace with inflation. Since 2003, the Bank of England has used the consumer prices index (CPI) as its official measure of inflation (see also retail prices index).