For members of Generation Rent, the HomeLet Rental Index shows that the cost of renting has increased over the past five years, with the cost of renting in your twenties passing the £58,000 mark. The exact figure, predicted using HomeLet Rental Index statistics, shows that by the age of thirty, an average tenant could have paid £58,080 in rent to landlords.
Residential properties in pensions
At the other end of the spectrum, those belonging to the older generations, including those who are currently of retirement age and those who are approaching it, were delivered some far more enticing news; that they'll be allowed to hold residential property in their pensions, via a fund, reducing their tax liabilities in the process.
A generational divide?
Some commentators and analysts believe that such a stark contrast between Generation Rent and buy-to-let landlords could turn into a generational divide, although this has also been disputed widely.
There’s no reason why such a generational divide should exist within the private rental sector, and it’s important to note that not all tenants pay a significant proportion of their wages on their rent.
Rents linked with affordability
In areas such as London, Edinburgh and Cambridge, affordability is an issue for some tenants, who could be paying upwards of 40% of their income on rent. However, in cities such as Plymouth (the UK’s cheapest city to rent, in terms of percentage of take home pay spent on rent), this number is far lower, with tenants only spending 27% of their income, on average, on rent.
In areas such as the North East, East Anglia and Wales, rental rates are currently stagnant, if not declining slightly, showing us that rental values could be stretching affordability in these areas, with rental bills staying fairly constant so that they remain attractive to tenants.
While many tenants are spending an increasing percentage of their wage on their rental bills, and while the £58,000 figure may seem high, it must be noted that the city with the highest spend on rent, London, also has the highest salaries, and so although it remains high, there’s no large disparity between the capital and the rest of the UK.
The cost of rent in London has risen by 45% (£426) since 2008 and the average income of tenants renting in London is currently £37,559. Tenants in London are, on average, spending £81,360 on rent in their twenties – with a current rent-to-wage percentage of 42%.
While it can be worrying to see the salary percentages that tenants in the UK are spending on their rent – it’s easy to forget that those who share their homes, either as couples or with friends, will see this percentage reduce significantly.
On the other hand, however, are those who have dependants, children, relatives who are unable to work etc., and who will really be feeling the effects of these rising rents and stagnant wages.