BBC Publishes Study into Unaffordable Rent for Young People
By |Published On: 4th October 2018|

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BBC Publishes Study into Unaffordable Rent for Young People

By |Published On: 4th October 2018|

This article is an external press release originally published on the Landlord News website, which has now been migrated to the Just Landlords blog.

The BBC has published an important study into the unaffordable rent that many young people across Britain are paying out for their homes.

People in their 20s who want to rent a home face having to pay out an unaffordable amount in rent in two-thirds of the country, the BBC research found.

Private tenants face financial strain, as the average rent on a one-bedroom property eats up more than 30% of their typical salary in 65% of British postcode areas.

The general consensus in the property industry is that spending more than a third of your income on housing constitutes unaffordable rent.

A salary of £51,200 per year is required to afford to rent a one-bed home in London.

Flat-sharing – the choice of many young working people – does not entirely resolve the issue, as 12% of postcodes in Britain remain unaffordable for two people in their 20s sharing a two-bed home.

Analysis by the BBC’s data team shows that a gross annual income of £24,800 would be needed for the average one-bed rental flat in England to become affordable using the 30% measure. In Scotland, £20,700 is required, while just £17,600 is needed in Wales.

Many people can pay more than 30% of their income on rent, but housing organisations insist that this puts considerable strain on the rest of their finances.

Living with parents

BBC Publishes Study into Unaffordable Rent for Young People

BBC Publishes Study into Unaffordable Rent for Young People

Friends Molly, 22, Danielle, 25, and Amelia, 24, all work in Cheltenham, but find it prohibitively expensive to rent in the town.

“It is expensive on a starting salary and any kind of saving is not an option,” Danielle explained.

Amelia, who previously rented, but was now back living in her family home, said that moving into a rental home in Cheltenham would mean giving up a car and cutting back on other spending.

However, staying with her parents also brought restrictions on where to look for jobs.

Shop manager Morgan said that she and her partner moved in with his parents in order to save, as rent would have taken up most of their salaries.

The 25-year-old said that the living arrangements were “not what I had envisioned”.

“My friends definitely struggle,” she added. “A lot of their money is used up in just their rent alone.”

The Director of tenant lobby group Generation Rent, Dan Wilson Craw, responded to the findings: “This research is more evidence of how difficult it is to lead the life you expect. If you get a job and work hard, you should expect to have some choice about living arrangements.

“People in areas with a strong jobs market have to find somewhere to share with others in order to afford to live there.”

The data reveals the importance of location in determining how significant a chunk of their monthly wages is likely to be spent on rent.

Kate Faulkner, a housing market analyst, highlighted that renting can be affordable in many areas outside of London, but the particular squeeze in the capital dominates the debate, meaning that policymakers overlook many other pressing concerns for tenants.

In London, tenants in their 20s with a typical income would spend 55% of their monthly earnings on a mid-range, one-bed flat. Housing charity Shelter considers any more than 50% as “extremely unaffordable” rent.

This rises to a whopping 156% – one-and-a-half times the average salary – in one part of Westminster (the most expensive part of the capital), where an average one-bed home costs a staggering £3,500 a month to rent.

In contrast, a young tenant looking for a typical property in the Scottish district of Argyll and Bute would only have to spend 15% of their income on rent.

Least affordable areas outside London 

The BBC has highlighted the other areas, outside of London, where rent is extremely unaffordable:

  • Epping Forrest – Tenants here can expect to spend between 62-71% of their earnings on rent.
  • Cambridge – Things are not much better here, at 62%.
  • Elmbridge – Rents here also eat up 62% of the average salary.
The Research Highlights the Most and Least Affordable Areas

The Research Highlights the Most and Least Affordable Areas

Most affordable areas

The following locations are much kinder to tenants’ pockets:

  • Argyll and Bute – Rent here accounts for just 15% of a tenant’s salary.
  • Scottish Borders – Tenants can expect to spend between 19-20% of their earnings on rent.
  • Northumberland – Rent will eat up just 20% of wages here.
  • East Ayrshire – The average rent here accounts for 20% of a tenant’s monthly income.

Finding one or more flatmates is a popular way of cutting the cost of renting for many young tenants. The research found that two people in their 20s sharing a two-bed flat in Manchester could pay just over 20% of their income on rent.

A separate study by Shelter, however, suggests that tenants may already find that they are cramped for space, compared to those who own their own homes.

The charity estimates that private tenants in England spend £140 more in housing costs than those with a mortgage. In the last ten years, when families have been increasingly likely to rent, homeowners have seen the average floor space of their homes increase by 7%, compared with a 2% rise for tenants.

That leaves homeowners with an average of 30 square metres’ extra floor space than tenants, which Shelter suggests is the equivalent of a master bedroom and a kitchen.

This all comes at a time when young adults might look back in anger at previous generations. The BBC research shows that a private tenant in the UK typically spends more than 30% of their income on rent.

In 1980, the average tenant spent an average of 10% of their earnings on rent, or 14% in London. However, there were many more people renting from councils or in social housing at that time.

Landlords point out that they face costs, including mortgages, insurance, maintenance and licensing, which need to be covered by their rents.

Chris Norris, the Director of Policy at the National Landlords Association, commented: “These costs are increasing, as the Government introduces new measures to discourage investment in property, such as the removal of mortgage interest relief and the changes to Stamp Duty.

“This is compounded by the number of landlords divesting, as their businesses become less financially viable, resulting in fewer properties available to rent, while demand for properties across the UK remains high.”

David Smith, the Policy Director of the Residential Landlords Association (RLA), has also reacted to the study: “With a majority of under 35s living in rented housing, it is young people now facing the consequences of the supply crisis facing the private rental market.

“The Government’s own data shows that, across England, there was a loss of 46,000 private rented homes in England in 2016/17, a result of tax increases on the sector.”

He continued: “The demand for homes to rent is not expected to slow, whilst figures from the RLA’s research arm, PEARL, warn of a net loss of 133,000 homes for rent over the next year.

“Given the scale of the housing crisis, ministers need to support the development of new homes to rent, alongside all other tenures.”

About the Author: Em Morley (she/they)

Em is the Content Marketing Manager for Just Landlords, with over five years of experience writing for insurance and property websites. Together with the knowledge and expertise of the Just Landlords underwriting team, Em aims to provide those in the property industry with helpful resources. When she’s not at her computer researching and writing property and insurance guides, you’ll find her exploring the British countryside, searching for geocaches.

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