Monday, March 4

Cost of renting one bed property soars in UK



The Guardian Property for sale in Peckham, south London. Renters in London are typically handing over 57% of their pay.

The cost of renting a one-bedroom property in the UK has risen to swallow almost half of the average young worker’s take-home pay, according to figures, while those living in London are typically handing over 57% of their monthly wages.

The average cost of a new tenancy on a one-bedroom home hit £746 a month in May, taking up 48% of the take-home pay of a worker aged under 30, data from property firm Countrywide showed.

In London, the average rent on a one-bed property was £1,133 in May, Countrywide said. Rising rents had outstripped growth in earnings to such an extent in the capital that since 2007 the proportion of take-home pay used to meet the cost had increased from 41% to 57%.

The firm said tenants were responding to the higher costs by moving into house shares. Since 2007, before the onset of the financial crisis, the proportion of one-person households in the private rented sector has decreased by 3%, while four- and five-person households have risen.

The figures, which are based on properties let through Countrywide’s letting agents and income figures from the Office for National Statistics (ONS), adjusted for tax, show that the lowest rents as a proportion of income are found in the east Midlands, where tenants are spending a third of their take-home pay.

Countrywide’s analysis of all new lets showed landlords have increased prices by 2.9% since May 2015, with the average monthly rent for all types of property across Britain rising to £945. In Greater London, the average new rent was up by 0.3% year-on-year at £1,292.

Tenancies coming up for renewal showed a bigger jump in costs, with rents rising by 5.2% over the year, to an average of £907 a month. In Wales, Countrywide said landlords were charging 9.4% more than in May 2015, with rents at £661 a month.

Recent years have seen a steep increase in the number of tenants, driven by a number of factors including high house prices and harder tests for mortgages. Although the housing market appears to have slowed, there seems to be no let-up in rising rents, and the most recent monthly report by the Royal Institution of Chartered Surveyors predicted that they would rise at a faster pace than house prices over the next five years.

Johnny Morris, research director at Countrywide, said that in most parts of Britain, rising incomes had softened the impact of increasing rents, but in London affordability was being stretched.

Many tenants have adapted to rising prices by either moving to cheaper areas, further from the centre, or sharing, he said. Stalling rental growth in the capital raises the question whether London’s rents have reached their affordability limits for now.