Rents outside London hit an average of £750 a month, further eating into take-home pay
Yahoo Finance UK
By Mark Dorman
UK rental sector
The average rent outside London hit £750 a month last month – even as take-home pay fell by 2%.
For those living outside the capital, over half of monthly income is now spent on rent.
And the situation inside the M25 is even more taxing – while average rents dipped to £1,882 in December, average earnings of £1,967 mean for many sharing is the only way to afford to rent.
Average rents across all property sizes grew by 2.13% in England, excluding London, 1.42% in Scotland and 1.43% in Wales in 2016, rising to £755, £721 and £634, respectively by the end of the year.
Together, this means the average monthly rent paid for a property in the UK outside London has hit the milestone figure of £750, new analysis shows.
Meanwhile, wage growth has failed to keep pace.
Disposable income, the take-home pay individuals receive after tax and benefits are accounted for, fell across the UK by -2.3% in the first three quarters of 2016.
Outside London (where average income is significantly lower than in the capital) disposable incomes are approximately £1,425 per month.
This means that for an average-sized household with a sole earner, over half (53%) of their disposable income is spent on rent.
The figures are revealed by Landbay, a peer-to-peer alternative investment platform that specialises in the property sector.
“Demand for rented accommodation will remain robust, as the myriad threats of rising house prices, falling real incomes and rising inflation affect the ability of aspiring homeowners to get their foot on the housing ladder and save for a deposit,” said John Goodall, CEO and founder of Landbay.
“The buy-to-let market has become a ‘catch all’ for a forgotten generation of house hunters, for those who cannot, or choose not to, buy a property outright.
“All eyes will now be on the upcoming Housing White Paper, which may be the best opportunity we’ve had in recent years for significant change,” he added.
The government announced last week a boost to starter home building.
Thirty councils across England will receive investment from the £1.2bn Starter Homes Land Fund to buy and bring up to scratch brownfield sites so that about 200,000 homes can begin to be built.
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