Research by Zero Deposit, a deposit alternative service, claims that under-30s face an almost impossible task when it comes to current rental affordability, with just seven per cent of the market classed as affordable when it comes to the cost of a rental deposit coupled with their first month’s rent.
It analysed average monthly rent prices in each of the UK’s 361 local authority areas, and average incomes of each age bracket or renters. It then looked at what percentage of local authorities were realistic when it came to rental market affordability, based on 50 per cent of the average renter's monthly income in relation to the combined cost of an upfront five week deposit and the first month’s rent.
The average UK rent comes in at £921 per month. London and the South East have the most expensive regional averages, standing at £1,873 per month and £1,148 per month respectively, while at local authority level, the monthly cost of renting in the City of Westminster is £3,154 - the highest in the UK.
There’s also the upfront cost of a deposit to take into account, which stands at £1,063 at five weeks for the average UK rental property. With this cost often coming within the same month as the first month’s rent is due, that’s a total of £1,913 required for the average UK tenant to secure a rental property.
With the average UK salary coming in at £2,950 per month, the cost of securing a rental property is out of reach for the average UK tenant based on their entire monthly income, let alone a 50% allowance of £1,475.
The analysis shows that under-30s face the toughest task when it comes to the initial cost of renting.
The average salary for an 18 to 21 year old comes in at £1,232 per month, meaning that 50 per cent of their monthly income (£616) would be enough to cover the monthly cost of renting in just 11 per cent of local authorities across the UK.
However, once you add the additional requirement of an upfront deposit, 18 to 21 year olds are unable to afford the initial cost of renting in every single UK local authority.
The analysis apparently also found that half of the average monthly income for this age group averages £1,202. While this is enough to cover the cost of a month’s rent in 78 per cent of UK local authorities, this proportion falls to just seven per cent when with the additional cost of an upfront deposit included.
Moving within the rental market is more realistic for those in older age groups. Tenants aged 30 to 39 could afford the cost of a rental deposit and an initial months rent in 32 per cent of local authorities, climbing to 46 per cent for those aged 40 to 49 and 39 per cent for those aged 50 to 59.
Sam Reynolds, chief executive of Zero Deposit, comments: “The high cost of renting is well documented but as our research shows, tenant affordability is dramatically reduced when taking the cost of an upfront deposit into account. So much so, that just a tiny proportion of the rental market is realistically affordable for those under the age of 30.
“Removing this high, upfront cost would, at least, give them a fighting chance at finding an affordable rental property, but as it stands, the financial obstacle they face is simply too large to overcome for many renters.
“The result? Many are forced to look further afield for affordable rents or give in to the inevitability that they have to allocate a far larger proportion of their income to covering the cost of rent, leaving them with very little to get by on for the rest of the month.
“The decision faced by many is whether to take on a greater financial burden or face the reality of not being able to secure a rental property. The level of competition has never been greater. This simply won’t change until the Government addresses the chronic undersupply of property in the UK and in equal measure, provides sufficient incentives for landlords to invest in the rental market.”
* Sam Reynolds is chief executive of Zero Deposit *
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.