Renters are spending nearly 40% of their wages on rent

Renters are spending nearly 40% of their wages on rent

0:07 AM, 8th April 2024, About 3 weeks ago 7

Text Size

The average UK tenant is spending nearly 38.3% of their monthly income on rent which means many will be teetering on the edge of affordability, research reveals.

Financial experts generally advise keeping the rent proportion of income below 40%.

The findings from Canopy looked at tenant income and rent payments to calculate the rent-to-income ratio.

Its inaugural rental affordability index also found that tenants in some cities are paying 60% of their income on rent.

‘Spending the vast majority of their salary on rental payments’

The firm’s chief executive, Chris Hutchinson, said: “It is sobering to see that one in five tenants are spending the vast majority of their salary on rental payments, and it neatly encapsulates the tricky situation that many tenants with aspirations of homeownership are in.

“According to our latest data, renters are spending 38% of their income on rent vs 18% for homeowners paying mortgages.

“That highlights the financial pressure on renters, meaning less money is able to be saved to achieve their goals.”

He adds: “Despite the price stability that further regulation would have on the market, there would likely be additional disincentives for landlords, leading to more leaving the market, and therefore reducing rental housing supply, or those remaining being less inclined to adequately maintain their properties.

“Where we could see positive change is towards longer tenancies for those who desire them, fostering greater security for families and communities.”

Tenants in Belfast are spending 27.6%

The Index highlights that tenants in Belfast are spending 27.6% of their wages on rent, while cities like Brighton see renters having to pay 60% towards rent.

That leaves renters with a much smaller financial cushion and makes it difficult to save money for a deposit to buy a home.

Canopy says its research reveals that one in five (19%) tenants in the UK will be spending at least half of their income on rent.


Share This Article


Comments

David100

10:29 AM, 8th April 2024, About 3 weeks ago

Rents in Belfast are lower, because house prices are lower. Its not rocket science. And it shows landlords across the country are generally not grifters, but respond to market forces.

David

11:08 AM, 8th April 2024, About 3 weeks ago

38.3% is not the vast majority of their salary. People need to grow up and realise having a roof over their heads is one of the most important things in life and therefore they need to pay the cost and ditch expensive cars , mobile phones etc. My letting agent will now only take on tenants who have high salaries so they can certainly afford the rent with plenty of change to spare.
If its cheaper to get a mortgage get a mortgage then.

NewYorkie

12:30 PM, 8th April 2024, About 3 weeks ago

Reply to the comment left by David at 08/04/2024 - 11:08
Maslow's Hierarchy of Needs #1 Shelter [not the non-housing housing lobbyists!]. Unfortunately, renters seem to put 'Self esteem' at the top of their list.

David Nichols

14:36 PM, 8th April 2024, About 3 weeks ago

Why is this news. Its been standard practice for years that credit referencing ensure affordability of annual income is no less than 30 x monthly rent which equates to 40% of income.
This is only a recent affordability problem as many tenants like to rent their pcp cars for £300pm and phones for £35pm, get their nails done for £30pm, buy coffee from Costa at £100pm.
Most landlords have a cheapish phone, 2nd hand car, drink tea at home, and bite their nails....

Judith Wordsworth

15:00 PM, 8th April 2024, About 3 weeks ago

My parents in the ‘50s spent 50%. Then when they later bought 50% on their mortgage.

Nick M

15:32 PM, 8th April 2024, About 3 weeks ago

The quote from the article is comparing apples and pears. It implies that it costs half to rent as to own. That's not true, other analysis shows currently cheaper to rent than own for same case. This quote looks at averages which have different income levels, ages etc. So giving a very misleading impression

"According to our latest data, renters are spending 38% of their income on rent vs 18% for homeowners paying mortgages"

Fed Up Landlord

18:36 PM, 8th April 2024, About 3 weeks ago

For the increases just blame Polly Bleat at
( We don't) Shelter
( Anybody) and Dan Wilson
( Stick In Your) Craw at Generation Rant. Oh and George Osbourne ( Section 24) and the rest of the lefty woke landlord hating fraternity.

Leave Comments

In order to post comments you will need to Sign In or Sign Up for a FREE Membership

or

Don't have an account? Sign Up

Landlord Tax Planning Book Now