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Can you afford to rent?

With average house prices hitting a new high and the deposit you need bigger than ever, for many the dream of ever owning their own home has turned sour. Life as a renter seems to be the most likely option. Yet with a shortage of properties increasing demand on places to live, renting has also become a nightmare. So can you afford to rent?

There’s no doubt rent prices have recently rocketed. The Guardian recently reported rents were up 4.6% on last year, while some parts of London have seen increases as high as 30% over the last five years.

The situation has even veered into the ridiculous. Last week social media ran with a Harry Potter-esque bed under the stairs for £500 a month story. A ridiculous price, but someone obviously thinks there’s demand out there.

In part this is down to a decline in those buying homes and an increase in the number of people renting, whether privately or through a social landlord. With more people renting, it's easier for landlords to charge more for rent.

Too expensive for young people

Rising rents have consequences with young people among the bigger losers. Housing charity Shelter have found one in ten working 20 to 34 year olds in England have moved back to their parents’ home in the last year because of high housing costs.

This move has been steadily increasing over the last 13 years, mirroring the increase of private and social renting across the country in that time, suggesting this group are being priced out of the market.

ONS data shows the number of 20 to 34 year old adults still living with their parents has increased by 6% since 2002. That’s roughly one million more people at home rather than renting or buying.

Most affected are 23 and 25 year olds, with ten percent more living with their parents compared to 13 years ago.

Even more costs

The actual rental amount isn’t the only extra cost faced by tenants.

If renters pay their energy bills directly to a supplier, they’re entitled to be able to switch to a cheaper provider. Yet comparison site uSwitch recently found more than one in ten private landlords have stopped their tenants doing this. With the average saving worth £339, it’s a huge premium some renters have to pay.

Some landlords and estate agents have also been taking advantage of the market. Loan company Ocean Finance recently reported one in seven renters were hit by fees averaging £117 to renew their tenancies. Elsewhere stories are rife of rents increasing and new terms imposed at the end of a contract if tenants want to stay.

Not great, yet sometimes it can seem an easier option than looking elsewhere.

Finding a place can be even more difficult

Anyone looking for a new place to rent will find it very different to a few years ago.

Paying a deposit upfront while your references are checked isn’t new, but it would mean the house is off the market. Now it seems some landlords still accept other bids but hold onto all the deposits while a decision is made – probably based on the highest bidder.

This rental gazumping has become more common as letting agents encourage prospective tenants to increase what their offer to make sure they get the property. It’s not uncommon for sealed bids to be submitted – something that used to just be for when people bought a house.

Not as bad as it seems

It’s certainly a difficult time if you are a renter, though the extent of this problem may have been exaggerated. While a recent report by letting agent Rentify declared on average 41% of salary goes on rent, it’s actually not a fair analysis of the data.

Instead of comparing average salary with average rents, we’ve taken into account that more often than not there’s more than one salary going towards rent. We looked at average rents across the country, and the average household disposable income (i.e. after you’ve paid taxes and National Insurance) in those same areas. The results show just how much your pay goes on getting a roof over your head.

For most of the country the amount spent on rent is close to a quarter of income after tax. It’s a figure which is manageable if you’ve got a budget to keep track of your spending.

However, it’s certainly not great reading for those in London, where nearly half the average net income goes on rent.

What next for Generation Rent?

The data suggests those most affected by rising rent are the young and those in London.  It’s very possible there are a huge number from these groups who either can’t - or soon won’t be able to - afford to rent.

As the numbers show, many are moving back home with their parents. This might be cheaper, but it too has consequences. The Shelter research found three in five of those who did this were worried doing so was holding them back.

Don’t bury you head in the sand if you can’t afford your rent.

For those don’t have elsewhere to go, prospects are darker. The worst thing you can do though is ignore a situation where you can’t pay your rent. Talk to your landlord and see if you can cut back to find some extra cash. The sooner you act, the better chance you have of taking control and avoiding eviction.

What do you think?

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  • b / 18 November 2017

    i agree, landlords have become very greedy. Its is the housing market and the need for more profit and bigger earnings they want. Not that the fact that they care if people can afford the big rents or not, they don,t care. I look at propertys and some are just old fahsioned terraced houses and they are not worth the rent they are asking no where near. Its only the greedy market that has pushed up prices, no one wants to challenge prices, properties are not worth what you are trying make people bellive that they are worth that much. I know more and more people now say im not paying that much for rent, its just not going to happen. And even those that waste of there income on renting know in there correct thinking minds - ie you know what i must be mad paying this amount for rent.

    No one wants to face it, no one wants to challenge it, no wants to deal with it in a real world. In the real world wages do not stack up, most workers get paid a poor wage and yet you at the top never metion this in articles or tv ect ect ect or papers. The truth is not being told and that is the problem with the so called modern day generation. They don,t tell the truth and be honest in real terms. You get better property abroad for your money and renting, is way better country and its not miserable and a bit like the uk people there arrogant attitude no wonder more and more are leaving i don,t blame them one bit, i really don,t.

    renting offices have only thought deeply on there own time, and sit there how can we come up with ways so it does not get us in trouble and charge more , introduce more charging notices on adverts and to the potential tennants that is just greed. I say if your cheeky enough to say and put it in the rents, im cheeky enough to fight back and challenge the norm.

    Its more like tinsile town with a lot of properties, you think is this rent so people can live in, or is a showhome that real people don,t live in, ie don,t touch anything don,t do this, don,t do that, you can,t have that, you can,t do that you get what i mean, those properties are just a waste of time and should come with warning stickers if there that fussy about renting, don,t rent it out. Real humans with real lives just want to live and not worry about all that flim flam nonsense.

    the prices for renting is just a joke now it really is a joke, you would be surprised how many say im not paying that for rent no way.

    This is the effect these greedy people have had on humans just trying to live, you should not have to put most of your wages on a dam renting.

    you should feel ashamed of your selves.

  • Robert / 9 January 2017

    My family and I are stuck in my parents household with an abusive parent, but we can't move out as we can't pass the renting agency's referencing due to only me working. My partner can not work for she is caring for our 8 months old daughter, so we have gone to the council but we are not getting anywhere there either as everyone seems to be in a higher priority than us. So what do we do? can anyone help?