Millennials Spending Over A Third Of Take-Home Pay On Rent — Even Though Rents Are Slowing
Cash-strapped Millennials renting in the UK are spending upward of one-third of their take-home pay of £17,359 on rental payments, according to the latest rental index from buy-to-let specialists Landbay. For tenants aged between 18 and 39 and living alone, a whopping 69% of their monthly post-tax income is spent on rent. (On average, they are earning £1,447 and spending £1,012 on rent.)
Rents have continued to rise over the last five years, increasing by 9% across the UK since April 2012 and by 8% in London. Monthly payments are a huge burden on those struggling to save, despite the pace of rental growth beginning to slow since August 2015, from 2.66% to 0.82%. While rents have begun to fall in prime Central London, outer boroughs popular with Millennials, such as Barking and Dagenham, Havering and Bexley have seen rents grow by 26%, 18.9% and 18.2%.
Landbay CEO and founder John Goodall said that whether these Millennial tenants are renting as a stepping stone on the way to homeownership or are choosing to rent for life, this generation is relying on a well-served buy-to-let market to ensure rental growth does not become unbearable.
“What is now needed is some firm government commitment to improving standards, affordability and supply of rental properties. Institutional investment and the subsequent growth and professionalisation of the private rental sector are already helping control rental growth and improve living standards for renters, so we hope to see some clear plans outlined in this month’s party manifestos ahead of the general election in June,” Goodall said.
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