The average rent for a one-bed property in the UK has topped the £1,000 mark, meaning it costs two thirds of average disposable income to pay.
The Landbay Rental Index revealed the cost of such a property was £1,010 in August, compared with the typical after-tax income of £1,497. The figure rises to £1,149 for two beds and £1,314 for three beds.
If the situation is difficult in the UK as a whole, it is worse in London, as higher prices in the capital mean that, even with London-weighting boosting salaries, the typical one-bed flat eats up 74 per cent of disposable income. The typical one-bed flat in the metropolis costs £1,461 to rent, while the average income is £1,967. Elsewhere, the figures falls to 41 per cent, with average rents at £1,892 in London compared with £745 a month elsewhere.
The consequences of such a squeeze on income include the difficulty anyone with debt may have in finding any spare cash to pay it down. Those struggling in such a situation may need expert advice on becoming debt free.
Chief executive of Landbay John Goodall said the situation could also put a squeeze on those with ambitions of buying a home. He remarked: “Property prices are growing even further out of reach for aspiring homeowners.
“With rents climbing too, even in the face of Brexit uncertainty, tenants saving up for a house face a triple challenge in trying to catch up with the pace of house price inflation, with more and more of their income spent on rent, and record low interest rates limiting their ability to save money.”
He called for chancellor Philip Hammond to use his first Budget this autumn to tackle the problem, observing that changes in stamp duty in the buy-to-let sector have seen the costs being passed on to renters.