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Rental payments in the UK now account for over half (52 per cent) of the average disposable income of £1,4711 for people living and working outside the capital, according to the latest Landbay Rental Index, powered by MIAC. The average rent paid for a residential property in the UK outside London hit £761 in March, taking annual growth to 1.21 per cent.
Those living in the capital face an even tighter squeeze. Average rents in London remain more than double the average for the rest of the country at £1,879, despite rental growth only recently returning to positive territory. Average disposable income in London is £2,108 so for single-earner households that means that the average monthly rent for a property is 89 per cent of take-home pay. Accordingly, most London households must rely on multiple or high-income earners.
If London workers are willing to move further afield to save money, they can expect to spend a far lower percentage of their disposable income on rent, closer to the national average. Average rents in the South East now stand at £1,053, 58 per cent of the average disposable income of £1,817 of those living in the region, whilst another option is East England, where average rents are 55 per cent of take-home pay.
On the other end of the spectrum, those working and living in North East see the lowest percentage of their salary going towards rent, where just 41 per cent of the average disposable income of £1,350 is handed over to the landlord each month.
John Goodall, CEO and founder of Landbay says, 'Rents have continued to rise over the last five years, increasing by 9 per cent across the UK since March 2013 and by 7 per cent in London – with monthly payments remaining a burden on those struggling to save. 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.
'There are currently over 4 million tenants in the private rented sector, but affordability is becoming an issue across many parts of the UK. Whether tenants are renting as a stepping stone on the way to home ownership or, increasingly, renting for life, they rely on the buy-to-let market to ensure rental growth doesn’t dampen their purchasing power. If we truly want to control rental prices before it reaches unsustainable levels, further investment in building more homes, specifically designed to rent rather than buy, is essential.'