Nearly a Quarter of Tenants Spend over Half their Pay on Rent

Almost a quarter of private tenants in the UK spend over half of their monthly take-home pay on rent, new figures from TheHouseShop.com show.

It is generally accepted that, for housing to be considered genuinely affordable, people should spend no more than 30-40% of their monthly income on rent, mortgage payments or other housing related costs.

Nearly a Quarter of Tenants Spend over Half their Pay on Rent

Nearly a Quarter of Tenants Spend over Half their Pay on Rent

However, the findings of the study by YouGov, on behalf of TheHouseShop.com, show that 24% of private tenants are currently spending more than half of their income on housing, while one in six spend over 60% of their monthly earnings on rent.

The research suggests that mortgaged homeowners are generally in a stronger financial position than tenants when it comes to affordability, with just 15% of mortgaged homeowners spending more than half of their income on housing.

Some 44% of mortgaged homeowners spend up to 30% of their income on their homes, which is perfectly within the affordable range. However, just 20% of private tenants can say the same thing – this is less than half the proportion of mortgaged homeowners, with housing affordability typically most stretched among young renters.

It’s further bad news for young tenants, who are believed to be hit hardest by the Government’s tax changes for landlords.

When looking at the mean percentage of income spent on housing, private tenants are paying almost 30% more than mortgaged homeowners, with 42.5% for renters and 32.9% for homeowners. This is owed in part to the fact that mortgage borrowers have been able to take advantage of a prolonged period of low interest rates and cheap loans.

Nick Marr, the Co-Founder of TheHouseShop.com, comments: “Renting in the UK at the moment is a bit of a catch-22. As tenants spend more and more of their income on rent and other bills, their ability to save for a deposit and benefit from the lower monthly payments offered by many mortgage deals diminishes significantly.

“For anyone spending more than half their monthly income on housing, even a relatively minor unexpected expense can pose a serious problem. Our YouGov research shows that almost a quarter of tenants renting from a private landlord are currently facing this situation.”

He explains how this is affecting tenants: “If your car breaks down or you accidentally damage your phone or laptop, you may find that you have to choose between paying your rent in full or getting them fixed – and that is an unpleasant scenario for anyone to find themselves in. With this in mind, it is easy to see how tenants can quickly become stuck in the renting cycle, and never achieve the level of stability and comfort they crave.”

With so many tenants struggling to keep up with unaffordable rent prices, we urge landlords to consider protecting their rental income against rent default by your tenants. Rent Guarantee Insurance ensures that you still get paid if your tenants can’t – get an instant online quote now: https://www.justlandlords.co.uk/rentguaranteeinsurance

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