Tenants spend more than half of their disposable income on rent, it has been revealed.
New figures suggest those renting outside of the capital see 52 per cent of their take-home pay allocated for rent. While that might seem like a large proportion, it’s good news for landlords as it proves demand for rental properties remain high.
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Average UK rents grow by 1.21%
The average rent paid in Britain - excluding London - reached £761 in March, taking annual growth to 1.21 per cent, according to the latest Landbay Rental Index.
Those tenants living in the capital face an even further squeeze, with average rents being more than double the average for the rest of the country at £1,879.
With the average disposable income in London being £2,108, it means that the average monthly rent for single-earner households in the capital is 89 per cent of their take-home pay.
South East a hotspot for rental income
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 stand at £1,052, which equates to 58 per cent of the average disposable income of £1,817 of those living in the area, while another option is East England, where average rents are 55 per cent of take-home pay.
By contrast, tenants in the North East see the lowest percentage of their salary going on rent, with just 41 per cent of the average disposable income of £1,350 being handed over to landlords each month.
Rental prices up by 9% in five years
John Goodall, chief executive of Landbay, said: “Rents have continued to rise during the past five years, increasing by 9 per cent across Britain since March 2013 and by 7 per cent in London.”
The research follows a separate survey earlier this month showing that good tenant demand and high yields are driving feelings of optimism among property investors, with one in five experiencing an increase in tenant demand during the course of 2017.
Karen Bennett, a director at Shawbrook Bank, said: “There’s a healthy dose of uncertainty around at the moment, but the buy-to-let market is showing its resilience. Property continues to offer an excellent underlying investment vehicle for professional landlords with the right invest investment strategy.”