One in 10 renters spend more than 60% of their take-home pay on rent
Renters are at the very limit of what they can afford, warns tenant services provider Canopy, as research shows millions are paying more than they can afford on rent
HIgh rents are leaving people struggling to keep up with bills while also preventing people from saving up to own a home of their own. Image: Vitaly Gariev / Unsplash
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One in 10 renters are spending more than 60% of their take-home salary on rent – more than double the 30% limit of what is considered affordable, new research has found.
Tenants are paying the absolute limit of what they can afford, according to research from tenancy and landlord services provider Canopy, amid record-high private rent prices in the UK.
Canopy’s analysis of 60,000 individual renters found UK tenants are paying an average of 35.7% of their pay after tax on rent.
But some renters are paying a much higher proportion than that.
One in five tenants are now spending half of their pay on rent while just over one in 10 are spending 60% of their pay on rent.
Some 4% of renters – just under one in 20 – are even paying 80% of their take-home salary.
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That is leaving little cash left to cover food and bills, let alone saving up to move into homeownership, said Chris Hutchinson, CEO at Canopy.
“The average tenant in the UK is now spending over a third of their take-home pay on their share of the rent; in many areas of the UK the average rises higher than 40%. It is sobering to see that some tenants are even spending 80% of their salary on rent,” said Hutchinson.
“Considering these numbers don’t include essentials like groceries, commuting costs and utilities bills, the figures raise serious questions on how feasible saving for a mortgage is for the majority of tenants in this country.”
There is a great discrepancy between how much tenants are paying in rent across the UK.
Canopy’s research found Bournemouth saw renters paying the highest proportion of their salary in rent at 46.9%.
That’s ahead of Brighton at 46.3%, London where renters pay 44.3% of their salary and Edinburgh at 40.6%
Southampton (40.5%), Cardiff (39.3%), Birmingham (38.7%, Leicester (38.1%) and Manchester (37.4%) round out the top-10 with all the towns and cities way above the 30% limit.
Regionally, London is, unsurprisingly, the least affordable place for workers to rent followed by the South West (44.1%) and South East (41.1%).
Fiona Fletcher-Smith, chair of the G15, said London would be “off limits” to many people on medium to low incomes without more social housing to reduce the pressure on the private rented sector.
On the other end of the spectrum, one in ten renters are spending less than 20% of their take home salary with the north of England boasting the most affordable cities for renters.
Sunderland (32.8%) and Newcastle upon Tyne (33.7%) both represent the North East in the top three most affordable cities in the country alongside Northern Irish capital Belfast (33.1%).
Hull (34%), Derby (35.2%), Sheffield, Leeds, Glasgow (all 35.5%), Bradford (35.6%) and Nottingham (35.7%) follow with all above the 30% limit of what is considered affordable.
Labour is introducing long-awaited rent reforms through its Renters’ Rights Bill and has promised to build 1.5 million homes while in power, including prioritising much-needed social rent homes.
Canopy’s Hutchinson and the National Residential Landlords Association have warned that further regulation to the private rented sector could lead to landlords selling up and worsen the supply and demand issues.
However, the prospect of a landlord exodus has been disputed by pro-renter groups.
Hutchinson said: “What is clear is that the market is in a precarious position, in that steps clearly need to be taken to make life easier for tenants, yet further regulation is likely to drive landlords away from the market and leave a smaller pool of properties available for tenants to choose from.”
Meanwhile, Labour is also reportedly looking to raise social rents above inflation for the next decade at October’s Budget.
The move has been praised by housing associations for bringing certainty needed to deliver new homes but has also attracted criticism for leaving tenants vulnerable to inflation spikes.
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