02 Nov 02.11.2017 The continuing rise of ‘generation rent’ (A generation of private renters)
02.11.2017 The continuing rise of ‘generation rent’ (A generation of private renters)
The number of people living in the private rented sector has doubled over the last decade, as rising property prices coupled with stagnating wages have forced more people into rental sector and, by 2025 a quarter of all households in the UK will be renting privately.
Private renters in the UK are paying higher rents than any country in Europe. Over 40% of UK tenants pay more than 50 per cent of their incomes on rent. Over the last year tenants paid around £54 bn to homeowners across the country, and in London this figure reached £20 bn, rising by almost 50 per cent over five years.
The amount of rent paid to private landlords in Britain is now more than double the interest rate the buy-to-let investors pay to banks. Over the last five years the interest paid to banks by landlords has reduced to a total of £6.4 bn, while the amount of rent paid to private landlords over the same period of time increased by £14bn. However, despite the borrowing costs being extremely low, soaring rents, stagnant income and the amount of average deposits rising more than twice has made it more difficult than ever for people to afford to buy property.
The average share of income that people in the UK spend on rent has significantly increased over the past decade. Older people, couples and renting families tend to spend over 50 per cent of their income on rent whereas, young people have to compromise and deal with longer commutes and less secure rented accommodations, to save enough for a deposit. Young professionals aged 25 to 34 constitute the largest proportions of those renting privately, paying around £24bn to landlords per year and this is expected to remain the same in 2021. Therefore, until there is a significant rise in the supply of affordable housing, which is unlikely to occur until at least 2025, renting privately will continue to be the norm and many will only become homeowners quite late in their adult lives.