Rising rents price poorer working families out of a third of Britain

Average cost of renting a home in the UK reaches new high

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The Independent Online

Lower-income working families looking to rent a home are now unable to afford properties in around a third of Britain.

According to a report from the Resolution Foundation, rents are now more expensive than the cost of monthly mortgage repayments on a property in almost half of the country.

Taking the example of a couple with one child and an annual net income of £22,000, the authors estimate where the family can afford to live. It concludes that  in 125 of the 376 local authorities in Britain studied, the rent would eat up more than 35 per cent of the family’s £22,000 net income, making it unaffordable - in 38 of the 376 areas the rent would consume more than half of their monthly net income.

Even a middle income couple (with one child and a median net income of £28,000) looking for a private rent would find themselves priced out of one in six areas of Britain using the same 35 per cent measure.

The report shows that the high cost of renting affects not just London and the South East but includes black spots across the country such as Aberdeen, Exeter, South Cambridgeshire and Warwick in the West Midlands.

Vidhya Alakeson, deputy chief executive of the Resolution Foundation, said: "There is an urgent need to provide more affordable housing for people on low and middle incomes. They are increasingly unlikely to be able to afford the deposit to buy their own home so turn to the private rented sector. But here too they are now struggling to find decent, affordable housing. Incomes for this group are not likely to grow for at least the next five years and this will only make the housing problem more acute.

"Only an increase in the stock of housing for rent can improve the situation and the government should make this a strategic priority. People should not have to choose between decent, affordable housing and other essentials in life such as clothing, food or furniture – yet that is increasingly what is happening as housing costs escalate."

Campbell Robb, chief executive of Shelter, said: "Behind these figures are families across the country being crushed by the cost of their home. We see families paying out so much of their income each month that they’re forced to choose between putting food on the table, turning on the heating or paying their rent.

"Decades of failure to build the affordable homes this country needs has pushed us to crisis point. More and more people are being priced out of homeownership while housing waiting lists continue to grow, creating unsustainable pressure on private rents. Yet last month we saw the government actually reduce what it plans to spend on affordable house building.

"Shared ownership schemes are one of the best ways to offer low-income families an affordable place to live. We need to see more schemes that are affordable for low income families and that give them the stability and security that our current rental market sadly doesn’t provide."

Meanwhile, a second report from HomeLet suggests that the average cost of renting a home in the UK has reached an all-time high at £811 per month, after the average rental amount rose by three per cent during June. This month’s average figure is 5.1 per cent higher than the same time last year. When the Greater London figure is removed, the average cost of is £681 per month, an increase of 1.9 per cent from May 2013.

Andy Richards, HomeLet's Business Development Director, said: "During this time of year, we do generally see an increase in the number of people renting a new home, particularly students who move into higher yield properties, which therefore pushes average rents up.

"Although the increase in rental amounts shows how the private rented sector is still in demand, it also needs to be remembered that tenant income isn’t increasing at the same rate. This month’s data shows the average amount a tenant in the UK earns increased by just 0.8% to £28,000 per annum.

"Yes, rents are going to increase naturally – however, costs are rising at a rate much faster than both inflation and tenant income. With recent reports of increased tenant rent arrears, it appears that maybe those renting a property just cannot afford spiralling living costs."