JANUARY 10, 2017 | BY A & S Property
Rents outside of London hit average of £750 a month
The average cost of renting a home has increased outside of London as rent paid rose 2% and pay fell over 2016, according to latest Landbay rental index.
The research shows that rental payments now account for more than half - 53% - of the average take-home pay for people residing outside the capital.
In London, average rents remain more than double the average for the rest of the country at £1,882, despite falling slightly by 0.13% in December. But take-home pay of £1,967 per month means those with average incomes will spend almost all their money on rent unless they split the cost.
Excluding London, average rents across all property sizes increased by 2.13% in England, 1.42% in Scotland and 1.43% in Wales in 2016, rising to £755pcm, £721pcm and £634pcm respectively by the end of the year. Collectively, this means the average monthly rent paid for a property in the UK outside London now stands at £750pcm.
However, wage growth has failed to keep pace with rising rents. Disposable income, the take-home pay individuals receive after tax and benefits are accounted for, dropped across the UK by -2.3% in the first three quarters of 2016.
With consumer inflation forecast to increase 2.7% in 2017, residential property continuing to rise and low interest rates restricting the ability to save for a deposit, the findings raise fresh concerns about the affordability of the housing market for aspiring homeowners, according to John Goodall, CEO and founder of Landbay.
He said: “Outside the capital, rents continued to grow across the country in 2016, a trend we expect to continue into the coming year. Demand for rented accommodation will remain robust, as the myriad threats of rising house prices, falling real incomes and rising inflation affect the ability of aspiring homeowners to get their foot on the housing ladder and save for a deposit.
“The government may have just committed £7bn to building an additional 200,000 affordable starter homes, but supply across all tenures is still too low. The buy to let market has become a ‘catch all’ for a forgotten generation of house hunters, for those who cannot, or choose not to, buy a property outright. All eyes will now be on the upcoming Housing White Paper, which may be the best opportunity we’ve had in recent years for significant change.”
UK Rental Index
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