If you think buying is tough – Can you afford to rent?
House prices rising and the deposit you need bigger than ever, despite the schemes developed here in the UK for many, the possibility of owning their own home seems an endless uphill struggle. Life renting is the only other option yet due to a well-publicised shortage of properties increasing demand on places to live, renting too is an expensive business.
The Guardian recently reported rents were up 4.6% on last year, while some parts of London have seen increases as high as 30% over the last five years.
The situation has even veered into the ridiculous with recent reports of a bed under the stairs for £500 a month story hitting the press
In part, this is down to a decline in those buying homes and an increase in the number of people renting, whether privately or through a social landlord. With more people renting, it’s easier for landlords to charge more for rent.
Too expensive for young people
Rising rents have consequences with young people among the bigger losers. Housing charity Shelter has found one in ten working 20 to 34-year-olds in England have moved back to their parents’ home in the last year because of high housing costs.
This move has been steadily increasing over the last 13 years, mirroring the increase of private and social renting across the country in that time, suggesting this group are being priced out of the market.
The number of 20 to 34-year-old adults still living with their parents has increased by 6% since 2002. Approximately a million more people at home rather than renting or buying. Bank of mum and dad must be having a field day!
Most affected are 23 and 25-year-olds, with over ten per cent more living with their parents compared to 10 years ago.
Not as bad as it seems
It’s certainly a difficult time if you are a renter, though the extent of this problem may have been exaggerated and there are schemes in place to try and help – see my blog entry here for details.
For most of the country, the amount spent on rent is close to a quarter of income after tax. It’s a figure which is manageable if you’ve got a budget to keep track of your spending. However, sadly the same does not apply to those in the capital – with nearly half the average net income goes on rent.
What next for Generation Rent?
The data suggests those most affected by rising rent are the young and those in London. It’s very possible there is a huge number from these groups who either can’t – or soon won’t be able to – afford to rent.
As the numbers show, many are moving back home with their parents. This might be cheaper, but it too has consequences. The Shelter research found three in five of those who did this were worried doing so was holding them back, presumably opening up issues with getting into debt.