Rent Costs Buy to Let Tenants More Than Half their PayMake Text Bigger
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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