Revealed: How much disposable income UK tenants spend on rent

 

Over the past five years, average rental prices in the UK have risen by around 9% and now stand at £1,199 a month, according to research from Landbay. But how much of their disposable incomes are tenants spending on rent across the country and how could this affect buy-to-let?

When taking London out of the equation, the latest figures from Landbay’s rental price index have revealed that the average tenant in the UK spends more than half (52%) of their disposable income on rent.
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Looking at the capital alone, where the proportion of renters far exceeds the rest of the country – with top prices to match at a whopping £1,879 a month – the average tenant spends 89% of their incoming wages on rent. The high costs are stretching the budgets of many working professionals, and recent research has suggested many are fleeing the capital in search of a better balance elsewhere.

By contrast, private tenants outside London can expect to pay an average of £761 a month, although there are obviously significant variations depending on location. As more people than ever before are renting rather than buying their own homes, the increased demand is not always being met by the market, which pushes rents up more in certain areas along with natural inflation.

John Goodall, chief executive officer of Landbay, said: “Tenants saving up for a house face a triple challenge with more and more of their income spent on rent, partnered with trying to catch up with the pace of house price inflation and record low interest rates limiting their ability to save money.”

Demand will always be high in the right location

However, for the buy-to-let sector, the figures show that demand for rental properties is still high and there will therefore always be yields to be made by landlords who keep up with the regulatory requirements.

Goodall added: “Not a day goes by when there isn’t more news about the supply/demand mismatch in the UK housing sector and until this is resolved, tenants will continue to rely on the private rented sector to support them.

“With the right property and the right location, there are attractive yields to be had, and consistent rental demand will drive returns in the long term.”

The most affordable place in the country to rent is the north-east, where tenants spend just 41% of their average disposable income on rent – and average rents are just £553 a month.

The north-west and the East Midlands are the next most affordable spots in England with an average 44% of earnings spent on rent. The north-west in particular is seeing a huge property investment boom at the moment as renters flock to places like Manchester and the surrounding areas for affordability, and investors can expect to generate impressive returns over the next few years as house prices and rents continue to rise.

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Revealed: How much disposable income UK tenants spend on rent

Revealed: How much disposable income UK tenants spend on rent

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