10:45 AM, 24th March 2022, About 3 years ago 2
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Research Rentd, has found that the earnings of the average tenant sit below the rental affordability threshold in five of the nation’s nine regions.
The research looked at the current average income of a tenant and how it compared to the average level of rental affordability based on the benchmark of two and half times the average rent. This shows that the average annual income for a rental tenant in England is currently £28,116 – 12% below the wider average.
As a rule of thumb, tenants should work to a rental affordability ratio of earning 2.5 times their rent in order to live comfortably. However, this is also a gauge that many letting agents will use when deciding if you are eligible to rent a property.
The average rent bill in England is £968 per month, or £11,616 per year. This means a tenant needs to earn £29,041 per year for their home to be truly affordable. This is, however, £925 more than a tenant’s average annual income. In fact, as many as five regions are home to tenant earnings that come in some way below the rental affordability ratio of 2.5 times income.
In London, the average tenant earns £39,585 a year but with annual rent costing an average of £21,084, this means they’re coming in -£13,125 below the affordability threshold.
In the South East, they’re falling -£4,531 short; in the South West, it’s -£4,046; in the North West it’s -£2,985; and in the East, affordability is missed by -£1,471.
However, four regions do offer a great chance of rental affordability.
In the North East, where the average annual rent cost is £6,996, a tenant would ideally earn £17,490 a year in order to live comfortably. In fact, the average tenant income for the regions is £25,878, £8,388 above the affordability threshold. This makes the North East the most affordable region in England.
In the East Midlands, the average tenant has an income £4,878 above the threshold; in Yorkshire & Humber, average income is £3,978 above the threshold; and in the West Midlands, income is £1,740 above the threshold.
Founder and CEO of Rentd, Ahmed Gamal, commented: “Rental affordability has been a burning topic for quite some time and unfortunately, it still remains a serious issue in today’s rental market. More and more of us are remaining reliant on the rental market until far later in life and this means more tenants fighting it out for a limited supply of rental homes.
“Rather than tackle this issue head-on and look to increase rental stock supply, the government has actually looked to reduce the number of landlords operating within the sector via a number of changes such as tax relief and an increase in stamp duty on buy-to-let homes.
“They’ve done so in order to increase supply to an overheated housing market to gloss over the fact that they simply haven’t built enough houses, leaving the nation’s tenants out in the cold as a result.
At the same time, wage growth simply hasn’t kept pace with the wider cost of renting and living and this has only helped increase the issue of affordability within the rental sector.”
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Jo Westlake
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Sign Up10:26 AM, 25th March 2022, About 3 years ago
That's a very selective use of averages.
How many single people rent average priced properties? Surely most would either be renting a room in a shared house or a one bedroom flat.
How many families rent and only have one wage earner and no UC entitlement?
Old Mrs Landlord
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Sign Up13:03 PM, 25th March 2022, About 3 years ago
Reply to the comment left by Jo Westlake at 25/03/2022 - 10:26I fully agree with the points you have made but nevertheless, as the headline states, rental affordability has declined of recent years and the responsibility does lie with the successive governments. Goaded on by renters' advocates such as Generation Rent, Shelter and Citizens' Advice politicians have failed to look at the situation in the round and merely made the calculation that there are more tenants than landlords and therefore it is in their best interests to introduce measures intended to placate those who rent rather than those who provide the accommodation.
The consequences have been
(a) additional costs for landlords passed on to tenants and
(b) many landlords selling up and putting their money elsewhere with the resultant shortage causing further rent rises.
Of course, the fact that so many can still afford to rent gives the lie to all that left-wing propaganda about greedy landlords squeezing their tenants for every last penny for cramped, squalid accommodation, propaganda which governments appear to have swallowed whole without any fact checking or consideration of the predictable consequences of the legislation they enact. Well, it diverts attention from their own failures, doesn't it?