by Mark Johnston
Rents Rise Faster Than Wages!
It appears that in the current financial climate Britain, whether it likes it or not, is becoming a nation of renters.
The economy may be growing, but few of us are feeling it. Many people face being long term renters and landlords know this.
David Newnes, director of LSL Property Services, said “Landlords across the UK have increased the stock of rental properties by around 10 per cent since 2008”.
Therefore recent data has revealed that rents are rising nearly five times faster than wages which is crippling millions of households.
Matt Hutchinson, director of flatshare website SpareRoom.co.uk, commented: “Landlords looking to cash in on demand and turn a fast profit need to realise that tenants have an affordability ceiling. Rents can only go so high before people are priced out of an area altogether”.
Figures just for England show rents rose from January 2006 until November 2009, decreased in 2010 until December, since when they have been on the up again. Increases were highest in 2008.
According to LSL Property Services, a lettings network which owns chains Your Move and Reeds Rains Private, rents rose by 0.2 per cent month-on-month in April to reach £736 on average – and for first time since November 2011 rents were up year-on-year across the whole country
London rents saw the greatest annual increase, jumping by 7.6 per cent to a record average of £1,110 a month.
Rents have soared amid strong demand in the sector as would be buyers have struggled to meet mortgage lenders’ requirements and make the jump onto the property ladder.
So increasingly, private rent is also becoming unaffordable, even though, for many families, it is the only option.
The Resolution Foundation, an independent think tank, report shows 1.3 million households on low to middle incomes are spending more than a third of their net income on mortgage payments, rent and maintenance costs.
Vidhya Alakeson, deputy chief executive of the Resolution Foundation and joint author of the report, said: “Many families are struggling to find any type of housing which fits both their needs and their budget”.
This said the Office for National Statistics (ONS) revealed that the average worker is getting a pay rise of just 0.8 per cent, nearly five times slower than the rate at which rents are going up.
It seems this toxic combination has therefore put a squeeze on many households throughout the UK, particularly when all their other bills, such as energy and food, are also rising rapidly.
Mortgage company Halifax recently published a report that shows many tenants spend an extra month at work to pay off their annual rental costs compared to home owners.
However, there have been some signs of the situation easing following Government schemes to help home buyers, which are filtering through to help people with smaller deposits.
Some Lenders have reported seeing increased numbers of first time buyers taking out loans amid better access to mortgages.
In conclusion rental prices are spiralling out of the reach of the average British wage earner and therefore this needs to be addressed or Britain really will have a housing crisis on its hands!
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