Rent Costs Buy to Let Tenants More Than Half their Pay

Rent Costs Buy to Let Tenants More Than Half their Pay

14:35 PM, 30th May 2012, About 11 years ago 7

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Rent costs nearly a third of buy to let tenants 50% or more of their take home pay, according to research by online property portal Rightmove.

While paying private rents averages 38% of take home pay for all tenants.

The survey also revealed that buy to let is a landlord market – with supply of properties to rent on Rightmove up 3% on a year ago, while searches for homes by prospective tenants are up 43% in the same period.

The figures come from Rightmove’s latest consumer confidence survey that asked tenants to report the real cost of renting.

Average ‘rental-take’ as a slice of take home pay is highest in the South East (41%) and London (40%) and lowest in Scotland (35%) and the North East (36%).

Tenants in London and the South East suffered the worst rental take – with 16% of renters in the capital and 19% in the South East paying more than 60% of their net income.

Tenants fear the rental squeeze will continue, with 61% predicting their rents will be higher in a year.

Nearly half of landlords (47%) predict higher rents in 12 months while 43% expect rents to be more or less the same.

Rightmove director Miles Shipside argues that many tenants cannot afford to pay higher rents, while letting agents report renters are making lower offers to landlords or moving neighbourhoods to pay less for renting a home.

“While the rental bubble is unlikely to deflate as there is no readily acceptable alternative to the rented roof, it does appear to be approaching a limit in some areas,” said Shipside.

“Agents report that the seemingly incessant demand is causing rental price pressure to spill over into other previously less sought-after areas and some tenants are attempting to negotiate lower rent.

“This is a clear sign that rents may be hitting an affordability ceiling in some locations. It is an early warning of some overheating and, as well as raising demand in cheaper locations, it will force some to find alternatives such as stay with parents or squeeze more people into smaller spaces.”

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20:21 PM, 30th May 2012, About 11 years ago

Rent might be more than 50% of someone's take home pay if they are on a very low income but most of these people will have some or all of their rent paid by Housing Benefit so it's not really a valid statement.  Alternatively someone deciding to live in a house that is bigger or better than they could live in may pay a high percentage of their take home on rent but that is their choice.

23:38 PM, 30th May 2012, About 11 years ago

Jo why are void periods increasing if every thing is ok with high rents?

Robert FitzHerbert

0:39 AM, 31st May 2012, About 11 years ago

So, apart from the information your article delivers, what point Ed' if any, are you trying to make apart from the problem of "affordability" and the lack of first time buying opportunities? I am 65 now but when I was buying my first flat in 1978 my parents thought I was mad to be paying 50% of my take home pay to a bank for the privilege of owning a home. In 1969 I was renting a flat that cost me £25 a month when my take home pay was £48pm. Every generation has to bear the cost of putting a roof of his or her head whether it be when you buy or whether you rent. What changes is the environment in which you have to make this decision as to whether the time is right or possible to do one rather than the other. Life is not easy now for young earners, but none should be fooled into believing that you have been singled out for unfair treatment because of your age or circumstances. As you live longer you see that the world changes only in cycles not in the difficulty of one generation in comparison to another. As a member of the post war 'baby boomer' generation who delighted in the freedom and carefree times of the 'sixties', I can assure you that good times can be followed by bad...just as easily as bad times WILL be followed by good for many of today's 20 or 30 years olds! So keep working and striving but be prepared for good and bad times over the next 30 years!               

Mark Alexander - Founder of Property118

7:12 AM, 31st May 2012, About 11 years ago

Bob, yours is my favourite comment to date on Property118. I haven't had as much life experience as you yet (I'm in my mid 40's) but I completely agree with what you've said and my experiences have been no different to yours.  Thank you.

chris howells

9:26 AM, 31st May 2012, About 11 years ago

I agree with one of previous comments, when buying my current residential home my mortgage was 60% of my take home pay. Even with two of us working it as a struggle to pay all the bills etc. its more or less the same for each generation whether they rent or buy.
One of of my rental prperties, all the rent is paid by the council but as I am on a fixed rate of over 5% I bring in only£50 per month profit. There you have 2 sides of the coin

12:58 PM, 31st May 2012, About 11 years ago

I enjoyed reading this article and I like how it phrased  "This is a clear sign that rents may be hitting an
affordability ceiling in some locations" I also found Bob's comments very
true. " I can assure you that good times can be followed by bad...just as
easily as bad times WILL be followed by good" The market is clear to
everyone: lack of first time buyers + increase demand for rental
property =high rental prices (no brainier I know!). Like Petrol
prices, rental prices have gone to a point where while it may drop, it will
never return to those prices we all remember. But, that is a simple fact,
prices change, a house that was worth £8k 50 years ago could be worth a
£million pounds today. Just look across the pond at New York as UK rental
prices are going exactly the same way. It is common in New York to pay 30%-50%
of their monthly wage on rent, priced out of the housing market this is their
only option.  However, New York tenants
have allot more rights over the properties they rent. Maybe, instead of
thinking prices will drop, we should focus on tenants getting more rights for
the money they are spending. 

Mark Alexander - Founder of Property118

13:09 PM, 31st May 2012, About 11 years ago

Hi Michael

I think tenants should have the right to know whether their landlord intends to sell or move back into a property within a short period of time. The difficulty of course is proving intent. Landlords and lenders need to be confident they can get vacant posession when they need it, otherwise our funding systems will collapse. I would also like to see landlords have more right, e.g. housing benefits paid direct, faster eviction proceedings if a tenant breaks their tenancy conditions etc. It's all about balance.

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