Renters in the UK spend average of 62 per cent of income on rent

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The extent of Britain’s housing crisis has been laid bare by a new report from the real estate consultancy Knight Frank.

Rising property prices and stagnant wages leave increasing numbers of people with little alternative to renting. Over the next five years the number of renting households is forecast to increase to around 5.79 million, or 24 per cent of the total, up from about 21 per cent today. More alarmingly, renters across the UK spend an average of 62 per cent of their income on rent.

A YouGov survey of more than 10,000 tenants and 26 major investors also found that while at least three-quarters of UK renters are living in homes owned by private landlords, they will increasingly rent from large-scale institutional landlords such as city firms and property companies investing in the growing Build-to-Rent or multi-housing sectors.

James Mannix, head of residential capital markets at Knight Frank, said of the report: “The strength of the UK private rented sector (PRS) has grown demonstrably in recent years. As consumer demand for affordable, flexible accommodation continues to rise, PRS is firmly establishing itself as a key opportunity for institutional grade investment, due to its long-term potential.

Informed by the survey of the key investors and operators in the market, Knight Frank estimates that by 2022, the private rented market will be worth in the region of £70bn.

Young professionals aged between 25 and 34 make up the largest proportion of households living in the PRS. However, there are also significant numbers of renting families along with 50- to 64-year-old sole-occupiers and couples in addition to retirees many of whom spend over half their incomes on rent. Overall, 40 per cent of renters pay more than 50 per cent of their incomes on rent, the report found.

Unsurprisingly, 68 per cent of renters still expect to be living in rented accommodation in three years’ time, with 30 per cent of respondents saying that the most common reason for renting was to saving for a deposit to buy a property, 21 per cent said renting allowed them to live in an area where they could not afford to buy, while 18 per cent calculated that renting was more affordable than paying a mortgage.

The Renters Alliance helps renters with bad landlords and letting agents. If you have a story you would like to share, please contact the National Renters Alliance through our website or email us at contact@nralliance.co.uk

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Thirty per cent of UK landlords have hiked rental prices as tax increases bite

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Thirty per cent of landlord have hiked rents in response to tax and regulatory changes according to a new survey of the rental market.

The study conducted by BDRC Continental on behalf of Foundation Home Loans revealed that 30 per cent of landlords have hiked rental prices, with the greatest proportion doing so in the East Midlands (41 per cent).

More than a third – 38% – of landlords said they had reviewed the size of their portfolios to ensure they could withstand any creeping costs, while 7% have sold off properties to either reduce portfolio sizes or diversify.

Furthermore, 19 per cent of landlords with 20 or more rental properties have reduced the size of their property portfolios by selling off property.

Aside from political uncertainty, many landlords have been deterred by recent tax changes, including the phasing out of tax relief for higher-rate taxpayers and the introduction of a 3% stamp duty surcharge.

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Jeff Knight, marketing director, Foundation Home Loans, said: “Landlords have been met with a raft of changes, from stamp duty charges to shifts in tax policy, and the lack of certainty on the political front has clouded the picture somewhat. The response has been to ‘batten down the hatches’, streamlining larger portfolios and protecting income by increasing rents – decisions that can be reviewed once the buy to let market is more accommodating.

“The fact remains that, whether it’s as a stepping stone to home ownership or a longer term lifestyle decision for tenants, the rental sector is an increasingly important part of the housing mix. This will ultimately be best served by a wide choice of property, and good landlords who can have confidence in decent returns.”

Percentage of UK landlords who raised rents, by region

UK 30%
East of England 33%
East Midlands 41%
London (Central) 24%
London (Outer) 24%
North East 23%
North West 35%
Scotland 15%
South East 33%
South West 31%
Wales 23%
West Midlands 31%
Yorkshire 31%

Percentage of UK landlords who reviewed portfolio size, by region

UK 38%
East of England 40%
East Midlands 50%
London (Central) 45%
London (Outer) 40%
North East 43%
North West 34%
Scotland 35%
South East 40%
South West 38%
Wales 32%
West Midlands 35%
Yorkshire 28%

The Renters Alliance helps renters with bad landlords and letting agents. If you have a story you would like to share, please contact the National Renters Alliance through our website or email us at contact@nralliance.co.uk

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