Tenants without Rent Guarantee Insurance are finding Private Rental Sector (PRS) rents are becoming more difficult to afford as many are handing over more than 50% of their gross pay to keep a roof over their heads according to the online property portal, Rightmove.
The average pay-to-rent ratio across the UK is 38% – but up to 1 million of the country’s 3.4 million Private Rented Sector tenants are paying much more, says the online property portal.
Areas where tenants are paying out the most rent from their pay packets:
- South East – 41%
- London – 40%
Areas where tenants are paying the least rent from wages:
- Scotland – 35%
- North East – 36%
16% of tenants in London and 19% of tenants in the South East pay rent that amounts to 60% of their net income.
Rightmove Director, Miles Shipside reckons tenants cannot afford to pay any more rent, despite the demand for rental properties far outpacing the number of suitable PRS properties available to rent.
According to Rightmove’s latest quarterly consumer confidence report, searches for buy to let properties have soared by 43% in the past 12 months, while the number of properties available to rent has only increased by 3%
Also, according to the property portal’s latest quarterly consumer confidence report, 61% of tenants and 47% of landlords predict higher rents in the next 12 months, but 43% of landlords expect rents to hold steady.
Landlords in the UK are becoming more savvy when it comes to ensuring rental income, though and many are utilising
Mr Shipside said: “While the rental bubble is unlikely to deflate as there is no readily acceptable alternative to the rented roof, it does appear to be approaching a limit in some areas. Property management agents report that incessant demand is causing rental price pressure to spill over into other previously less sought-after areas and some tenants are attempting to negotiate lower rent. This is a clear sign that rents may be hitting an affordability ceiling in some locations. It is an early warning of some overheating and, as well as raising demand in cheaper locations, it will force some to find alternatives such as stay with parents or squeeze more people into smaller spaces.”