Economy

Single people fork out 35% of their earnings on rent

The amount a single person spends on rent has risen to the highest level in a decade.

New research by Zoopla found that rent affordability — that is, rent as a percentage of median income — is now 35 percent for a single earner.

And the percentage is expected to rise towards 40 percent, according to the real estate website.

Up: The amount that a single person spends on rent rises to the highest level in ten years, according to Zoopla

It said a single earner could soon pay 37 percent of his normal income to his landlord if rents continued to grow at 12 percent through 2023.

However, it added that it did not expect rental growth to continue so quickly.

Instead, it suggested that a “modest improvement” in rental housing supply, along with a hit in purchasing power, will slow rental growth to 5 percent next year.

It comes amid a cost-of-living crisis, with cash-strapped households facing a surge in energy and food bills.

The average rent in Britain reached £1,175 a month in November, according to a separate survey by the tenant referral service HomeLet. That is an increase of 0.3 percent compared to the previous month.

Excluding London, the average rent is £977 per month, up 0.1 percent from a month earlier. Rents in London are at an all-time high of £2,011 per month.

Renters have several options when faced with increasing affordability. These include moving into shared rental housing to help spread rental costs for single and low-income households.

The latest UK Housing Survey (2020/21) shows that there is an equal split between multi-income private tenants – such as couples or multi-person households – and single earners, including singles and single parents.

Zoopla expects more home sharing given the high rents, with particular pressure on single earners.

Recent research from the Resolution Foundation has found a steady increase in home sharing, as measured by space per private tenant, which has declined by 16 percent over the past two decades.

The Percentage Of Salary Typically Spent On Rent Is Now 35 Percent For A Sole Earner

The percentage of salary typically spent on rent is now 35 percent for a sole earner

More sharing will help drive rental growth in the short term, but the impact will diminish in markets where this option has already been fully exploited.

Another option for single people is to live with their parents or a relative. Data from the Office for National Statistics shows that the number of young adults aged between 20 and 34 staying at home reached 3.6 million last year.

Tenants could also downsize to smaller rental properties. Zoopla recently highlighted in a separate survey that renters are looking for small homes with increasing demand for one and two bedroom apartments and declining demand for houses.

Zoopla’s Richard Donnell said: ‘A chronic lack of supply is behind the rapid growth in rents that are becoming increasingly unaffordable for the country’s tenants, particularly single-person and low-income households.

“Many are also staying put to avoid the worst rent increases,” he said.

‘Tenants have to adopt different strategies to deal with rising rents. Only a significant increase in investment in the sector will alleviate affordability pressures and increase consumer choice. In the short term, we expect that the increasing unaffordability of rents will reduce the rent increase to 5 percent in 2023.’

The Financial Strain On Single-Income Families Is Likely To Increase The Number Of People Moving To Shared Tenancy

The financial strain on single-income families is likely to increase the number of people moving to shared tenancy

Michael Cook, of rental agent Leaders Romans Group, said: ‘At the moment there are simply not enough affordable properties on the market.

“The sector has filled the huge gap left by a shortage of social housing and the government needs to work with the many good landlords in the sector, rather than against them.

“They should actively monitor existing legislation, rather than continuing with a two-pronged approach of new legislation and taxation, which pushes much-needed good landlords out of the sector and raises average rents due to a lack of supply.”

He added: “We will see the rental market reach a tipping point where the average monthly rent cannot go up and is still affordable. The knock-on effect of this is that landlords will not receive monthly payments from tenants, which will affect their ability to pay their mortgages, and as for tenants, they will be left in a position of not being able to find affordable accommodation.

And David Reed, from estate agent Antony Roberts, said: ‘Action is now needed to address the persistent shortage of stock caused by landlords becoming increasingly disinclined to hold an investment property, let alone want to explore whether they want to own more real estate.

‘Simply put: the more rental properties are available, the less upward pressure on rents.’

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Jacky

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