Following on from Mortgage Freedom Day, BBC News has revealed that the first week of May marks the point at which renters have earned enough take-home pay to cover a year’s rent.
Taking into account the information gathered, the BBC England Data Unit also found that if the typical full-time worker in England lived alone and spent their take-home pay on rent, then they would have made enough money to cover the year by 3rd May.
For those living and working in Scotland, the approximated date would be 24th April, and in Wales they would be rent-free by 12th April.
An analysis by BBC News shows that middle-income earner in England would have to work 86 days in order to cover the rent for a two-bedroom home. This statistic has increased by five days since 2011. In Scotland it has fallen to 79, and in Wales it has fallen to 71.
With the on-going rise in property prices, people are struggling to buy a home, resulting in the number of households renting privately reaching a 30-year high, according to data from the English Housing Survey. However, it should also be considered that estate agency Kinleigh Folkard and Hayward (KFH) have recently undertaken research revealing that many tenants are happy to be living in rented housing.
It probably comes as no surprise to many that London has seen an increase in the gap between rent and wages. The cost of rent amounts to 15 days more pay than it did in 2011. A private tenant in London would need to work for 165 days in order to cover the cost of rent on a two-bed property.
The analysis (compiled by Eurostat) shows that in 2017, the average monthly rent for a two-bedroom flat in London was twice the cost of one in European cities such as Madrid and Brussels.
With a rising demand for houses in areas such as Cambridge due to an increase in engineering jobs, the south of England is also struggling to meet demands.
However, looking further north we can see a different result. Similar to Scotland and Wales, there has been a fall in the number of days it takes to pay the rent, most drastically so in the North East and North West. These areas have seen a faster increase in take home pay than rental prices, due to the Personal Allowance having a higher limit for the amount earned before tax.
This allowance has increased from £7,475 in 2010-11, to £11,000 in 2016-17. This year it is currently at £11,850.
David Smith, policy director for the Residential Landlords Association, has commented on the BBC News’ analysis: “There are local pressures across the country each with different underlying cause. What we need is a housing policy that is more flexible and we need to remember the vast majority of landlords don’t rent out properties to make a fortune off the backs of young people.”
Of course, there are always circumstances that may arise that can affect a renter’s financial situation. Landlords, if you are worried about the risk of rent default by your tenants, then consider investing in Rent Guarantee Insurance. Having this peace of mind can take away some of the stress of being a landlord, helping you to prepare for different possible situations.