Rocketing rents hurt single-earning tenants the most

Rocketing rents hurt single-earning tenants the most

0:02 AM, 9th December 2022, About 2 months ago 2

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Single tenants are finding it harder to afford their rent with rocketing prices, one property platform reveals.

In its latest rental market report, Zoopla says that rental unaffordability for single earners has reached its highest level for more than a decade.

The report points to the average rent for a new letting growing by £117 per month since last year and it is now £1,078 per month.

For a single earner renting on their own, that accounts for 35% of the average single tenant’s income.

And that ratio is at its highest for more than 10 years with a lack of rental supply and strong demand making the situation worse.

Enquiries about homes to rent

However, enquiries about homes to rent per estate agent’s branch are 46% above the five-year average with tenants having to rent longer because of rising mortgage rates affecting their chances to buy.

Zoopla also says that the gap in rental inflation between new lettings and all privately rented homes is also widening.

They say that for the 75% of tenants who do not move each year, their rent rises tend to be much lower at 3.8% in the year to October 2022.

This gap is why a growing number of renters are renewing their tenancies and staying put to avoid rent hikes if they move.

Proportion of earnings needed to pay rent

There is more bad news for single earners because Zoopla has calculated that in 2023, if rent price rises continue at the current rate of 12% – the proportion of earnings needed to pay rent would be stretched even higher to 37%.

This is unlikely, however, since the growing unaffordability of renting means that tenants won’t be able to afford the higher rates and inflation looks set to slow to 5% next year

The report also looks at where rents are growing quickest, and Zoopla says rents have risen by 17% or £273 per month in London over the past 12 months.

In Manchester rents grew by 15.6%, Birmingham 12.3%, Glasgow 14.1%, Bristol 12.9% and Sheffield 12.4%.

‘Renters are paying the price’

Richard Donnell, an executive director at Zoopla, said: “Renters are paying the price for low levels of new investment in private rented housing over the last six years.

“A chronic lack of supply is behind the rapid growth in rents which are increasingly unaffordable for the nation’s renters, especially single-person households and those on low incomes.”

He added: “Renters are having to adopt a range of strategies to deal with rising rents.

“We have seen a rapid increase in demand for one and two-bed flats while some renters are now considering sharing a property to cover the cost of the rent.

“Only a big increase in investment in the sector will ease the pressure on affordability and boost consumer choice.

“In the short term, we expect the growing unaffordability of renting to reduce rental increases in 2023 to 5%.”



Comments

northern landlord

13:51 PM, 9th December 2022, About 2 months ago

“Rocketing rents hurt single-earning tenants the most” So what? It’s stating the obvious isn’t it? If the burden of rent is falling onto a single income rather than being shared between two or more any rise will impact the single income more. What is more interesting is that the 75% of renters who stay put have seen inflation beating rent rises of only 3.8% so with inflation over 10% effectively their landlords are subsidising them. This is surely contrary to popular myths about Landlord inhumanity to their tenants?

Of course, if a tenant leaves and the Landlord actually decides to keep on renting rather than selling up they would be daft not to ask for current market rent. That is when the tenants start “paying the price for low levels of new investment in private rented housing over the last six years” all brought on by the Government paying attention to the landlord bashing of Shelter Generation Rent etc.
Zoopla predict that rent rises will be down to 5% sometime in 2023. Which tenants is that for? New renters or those that are staying put?

Contended Ted

20:48 PM, 11th December 2022, About 2 months ago

The dilemma of the single person in the rental household is even more stark in the one income family household. There is a natural limit to what a tenant can actually pay given that earning more and / or spending less is not always a quick transition. If we take our tenants to a point of overwhelm where they are cold and hungry and can’t get off the hamster wheel of a pointless existence, then rent payments is a soft target when there is no other way. Luckily mortgage rates seem to have peaked. After all we the landlord came close to that wall ourselves of how to pay out more than was coming in. If tenants are staying put that’s a mixed blessing. A tenant leaving is an opportunity to test the market or sell without guilt.

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