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Rising rents now massive problem for older tenants too, claims analyst

A prominent financial analyst says the fast-rising costs of renting mean tenants are becoming less financially resilient - and this applies to older renters as well as young ones.

Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, says: “Rent is such a massive drain on our finances that trying to build anything for the future while meeting monthly rental costs is like trying to run a bath with the plug out. The cost-of-living crisis has landed us with new, super-charged cash drains. And with more of us renting later in life, it can have a catastrophic impact on our financial resilience.”

She says government figures showed that 19 per cent of people rent privately and 17 per cent live in social rental housing.

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Some 26 per cent of those aged 35 to 44 now rent privately, up from 18 per cent in 2010/11. And some 16 were cent of those aged 45 to 54 now rent privately, as do 11 per cent of those aged between 55 and 64. In London, 27 per cent of people rent privately.

Coles says renting is fundamentally more expensive than owning at the moment. 

Three quarters of people with a mortgage have a fixed rate deal, and even those on a variable rate still have relatively cheap mortgages by historic standards. The English Housing Survey shows that the average weekly mortgage payment is £174, and the average weekly private rent is £198.

She adds that on average renters tend to be paid less, which means the impact on the finances of renters is even more striking: those with mortgages spend an average of 18 per cent of their household income putting a roof over their heads, and private renters pay 31 per cent.

Coles says: “To make matters worse, rents have been rising through the roof. With more people renting later in life, and more landlords deciding to throw in the towel, figures from Zoopla for the first three months of this year found that rents are up 11 per cent in a year – which is a 14-year high. And there’s no relief in sight. According to the Royal Institution of Chartered Surveyors, over the next five years rents are expected to grow faster than house prices.”

Hargreaves Lansdown’s own research suggests that three in five renters have little room for financial manoeuvre while the government’s Office for National Statistics has found that - if presented with an emergency cost of £850 - some 29 per cent of renters could not afford it.

Coles goes on to say: “While this creates enormous problems for renters of all ages, as they get older it raises the horrible question of whether people can afford to retire. Those who have been able to buy will eventually pay off their mortgage costs, so they don’t have to factor them into their retirement income needs. 

“Those who are still paying the rent not only have to set aside enough cash to give them an extra £800 a month on average, they also have to consider the fact that this rent will continue to rise throughout their retirement. So it’s particularly troubling that this group is less likely to have been able to put money into a pension.” 

Want to comment on this story? If so...if any post is considered to victimise, harass, degrade or intimidate an individual or group of individuals on any basis, then the post may be deleted and the individual immediately banned from posting in future.

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    So the difference between having a mortgage and paying rent is £24 a week? That’s a small price to pay for not having the responsibility of organising and paying for maintenance, new bathrooms, gutter cleaning, boiler maintenance, roof repairs, decorating, carpets, insulation, licencing, insurance etc etc. My tenants aren’t paying £198 a week… most are paying around £100-110pw. Where do they get these figures?

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    Not to mention the additional costs of buying and selling, into the tens of thousands in buying and not much less when selling.

    Tenants only have to pay the cost of moving their own belongings and that need not be frequently if they're good tenants.

     
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    Totally agree. Where do they get the "extra £800 per month" from?? All my rents are less than £800 a month, and that's for 2 and 3 bed houses. If they were paying £800 plus my mortgage plus all maintenance costs their rent would be much higher than it is.

     
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    Rents rising over the next 5 yrs, well who would have thought it ? Mr Gove's white paper and then Princess Nut Nuts EPC C , adding costs and red tape = rent increases, the end user always pays .

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    Very good another day another Survey of course renting is far cheaper than buying I disagree with the Article. My average renter is paying £350. pm, and I pay the Insurance, do all maintenance & up keep. Try getting a Mortgage for that, are they having a laugh. Then we are burdened with worse than useless Deposit Schemes not fit for purpose so I don’t take them anymore + Section 24, Section 21, Criminalised, HMO’s etc. Think on high inflation, Interest rate rocketing. We all know at who’s door the blame firmly lay for any problems regarding Private Rented Sector, try No 10.

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    A tenant on low to moderate income is entitled to UC which includes the Local Housing Allowance towards their rent. A homeowner isn't entitled to a corresponding payment towards housing costs.

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    Yes, I hate that I can't claim UC because I have more then 16k in assets, even though I am earning close to minimum wage.

     
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    Why buy when we have a White Paper granting them rights to assume ownership, occupy the Property as long as they like, walk away anytime they like or stay for ever, no Mortgage’s, no penalties, commitments or any financial loss or Courts permission required but just as of a right. Some of those so called Regulators and Law makers needs a brain scan & reset, before the economy seriously collapses.

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    Jo, very good so they might not even be paying the Rent how did I omit that !.

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    I can see where Elizabeth is coming from in regards tenants not being responsible for the ongoing upkeep of the property, but that is ongoing and spread over the whole time they are in the property, when the young rent or the young buy.... they are really equal, the young will be working and can be flexible in terms of how much they earn..... when they retire that is not the case.

    If you rent in retirement (in the PRS) then your future is GRIM. The rents will keep going up and your available income is fixed. The govt will have to deal with this at some time. Renting whilst an OAP is the worse of possibilities, and of course you can be evicted !! In your 80's !!

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    Oh dear not this old chestnut again. You can't reasonably compare rent payments to mortgage payments, unless you add in all the maintenance costs, which tenants don't have to pay for.

    I had tenants buy their own place after 9 years of renting from me (yes they managed to save up the deposit) and they told me their mortgage plus all the insurances etc was the same as the rent, and that's before any property maintenance costs. Within a week of moving they asked me for my plumber's number. Welcome to the expensive world of property maintenance.

    On average tenants earn less than home owners, yes of course they do, that's why they are tenants not home owners! We have a system where if you work hard and save up then you will probably be able to buy a property if you want to.

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    There are several different types of renting in retirement.
    Firstly there is either Social Housing or Private Sector.
    Then there is specific retirement housing or standard housing available to all age groups.

    There are the people who have rented their entire life. Some as Social tenants with ludicrously low rent, others in the PRS with inconsistent levels of rent. Some will have annual rent increases to keep pace with market rent, others will very rarely have rent increases. Some will move from the PRS to Social housing as circumstances change. Maybe the arrival of children or declining health. Some will have always fully paid their own rent, others will have relied on benefit top ups.

    Then there are people who have to suddenly rent due to changed circumstances. Relationship breakdown for example. They are probably in the worst position of all renters.

    Then there are those who have owned for most of their adult life who decide to sell to release their equity and remove all property maintenance responsibilities. Having potentially a couple of decades of renting in later life if you have a big pot of money and a decent pension strikes me as a very good idea for some people. Especially someone who has been widowed and is worried about Inheritance Tax. The ability to easily move to more suitable housing should mobility decline without the hassle of trying to sell your current home is worth a lot.

    The likelihood of eviction is minimal if you're renting specific retirement accomodation, either in the social sector or PRS.

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    Excellent points on the issue of renting in retirement. Probably not currently a major problem, but may well be in years to come. Typical older people now may well own a property that really needs renovation, so it can hard for them to move as the sort of place they might like to move to might well be more expensive (speaking from experience of friends with elderly parents).
    The worst situation now is probably for young families with several kids and pets and on benefits as they are really not an attractive proposition to most landlords.

     
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    Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, says: “Rent is such a massive drain on our finances that trying to build anything for the future while meeting monthly rental costs is like trying to run a bath with the plug out. The cost-of-living crisis has landed us with new, super-charged cash drains. And with more of us renting later in life, it can have a catastrophic impact on our financial resilience.”

    The focus has been on supply/demand. What matters is price/demand.

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    That's called market forces, balancing price so demand can be met.

    However most landlords don't price so highly that there is only one tenant willing to pay the price asked which is why the bricks being thrown at landlords is totally unjustified.

    Remember for every available property a landlord only needs to find one tenant willing and able to pay the rent asked for but despite claims to the contrary we do NOT charge the maximum possible rent, preferring to choose the best possible tenants, with solvent property owning guarantors, stable employment and impeccable credit ratings.

    Shelter, Generation Rant, Acorn etc have been most helpful in making this task easier but alas many otherwise excellent potential tenants end up failing to meet our requirements and only have these organisations to blame for any additional difficulties and added stress they will undoubtedly experience.

     
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    The interfering Government Departments
    have a lot to answer for. All this red tape rubbish is costing Landlords and it has to be passed on.

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    I was speaking to H-L yesterday. The very helpful young man advised during a quite spot that he was not long out of college and found a good rental property. And that's probably the case with the analyst. The polll is likely to be of people within the office. H-L have a great website but they seem to be rather naive with investment advice, l think it was Neal Woodford that they backed who completely tanked.

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    I would never take advice from wet behind the ears graduates working for huge companies.

    Fifty years ago I was one and my advice even to myself was abysmal, based on my own conceit and inexperience.

    The only clever decision I made then was to propose to my wife of nearly 50 years!

     
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    Agreed Robert, a degree is no more than a worthless piece of paper, experience in the real world is what cuts it

     
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    Andrew

    I used to claim that a degree showed you were able to learn quite difficult things.

    I now think it often means you are unwilling to learn anything further!

     
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