Yahoo Finance UK rents eat nearly 40% income of low earners
Data released on Wednesday has shown that those in the lower quartile of earners can expect to spend 38% of their income on rent if they are letting a median-price property in the UK.
The news comes amid a burgeoning cost of living crisis, as price inflation across the economy threatens to hit consumers' wallets and coronavirus support measures are phased out.
The Office for National Statistics (ONS) figures, tracking private rental affordability, also showed that, unsurprisingly, London is the most unaffordable region to rent in.
In London, renters have to spend 37.7% of the average income on the average rent.
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The ONS deems a property affordable if a household would spend 30% or less of their income on rent.
In London, only a household in the higher income quartile would be able to rent a property without spending more than 30% of their income on rent.
A private renter on an average income would spend 23% of their income on the average rented home in England.
This is down from a recent high of 26.3% in 2016, due to average wages growing faster than average rents.
Housing stock is also an issue. Dwelling stock data from the Department for Levelling Up, Housing and Communities suggests nearly 20% of all dwellings were privately rented in 2020.
"Life could get even harder in the immediate future, because many landlords are cashing in on house price rises and selling up, while others are switching to holiday lettings," said Sarah Coles, personal finance analyst, Hargreaves Lansdown.
"According to the Royal Institution of Chartered Surveyors (RICS), the number of rental properties coming to the market has dropped relentlessly over the past 12 months. This is pushing rents up, and agents expect them to go even higher: RICS is predicting annual rises of 2.5%.
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"It means if you want to live in an area of high demand and low supply, you could easily end up paying far more than 23% of your income to get the property you want."
The data comes as the government moves to scrap the Universal Credit £20 a week uplift — a measure brought in to help the poorest manage the impact of the COVID-19 pandemic.
Universal credit is a benefit claimed by more than 5.8 million people in England, Scotland and Wales — with almost 40% of them classed as being in employment.
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The government says higher wages, rather than taxpayer-funded benefit increases, are the better option.
The government has been widely criticised for the cut, which comes at a time when living costs are heading higher due to inflation and savings interest rates are at rock bottom.
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