Record rents are crushing renters, with the average household in the UK spending 42% of their after-tax income on rent, according to an index.
The Hamptons Monthly Rental Index shows record rental growth last year meant tenants spent an average of £13,560 on rent, equivalent to 42% of their after-tax income, the highest proportion highest since the index was launched in 2010.
Private tenants spent a collective total of £62.4bn on rent last year, up from £58.2bn in 2020.
Read more: UK house prices: Sales increase despite rising interest rates
When utility bills such as gas, electricity, council tax, broadband and TV licenses are taken into account, the average household spent 52% of their after-tax income on rent and utility bills. last year.
Collectively tenants paid a total of £77.8bn in rent and household bills last year, up from £73.4bn in 2020.
“Financial pressures are raining down on households, but whereas last year it was rent growth that ate away at tenants’ incomes, this year it’s more likely to be energy costs,” said Aneisha Beveridge, head of research at Hamptons.
“Rent growth is slowing as affordability pressures take hold and we expect rents across Britain to end the year up 2.5% on 2021, from 7% today. However, even if household incomes increase by the forecast 3.75%, it will not be enough to fully offset the rise in utility bills and tenants in particular will feel the effects,” a- she added.
These numbers are expected to rise in 2022 as the cost of living crisis deepens.
By the end of this year, Hamptons estimates the average renter household will spend a record 54% of their after-tax income on rent and household bills, equating to an additional £4.6billion paid by tenants. tenants.
This will cost the average household an extra £1,008 each year, with the total amount spent on rent and bills expected to reach £17,914 per household by the end of 2022, up from £16,906 in 2021.
“While we expect rent growth to slow to around 2.5% by the end of 2022, this will be offset by an increase in the energy cap and general price increases which could lead to higher household bills. of 15%, significantly outpacing earnings growth which is expected to increase to 3.75%,” the report said.
Regionally, tenants in the South of England have the lowest disposable incomes, made worse by strong rental growth since the start of COVID. The Southeast is the only region where rent accounts for more than half (52%) of after-tax household income, with utility bills adding another 12%.
The average privately rented household in the region spent £18,490 or 64% of their after-tax income on rent and bills in 2021, up from 59% in 2019. That figure could rise to 65% by the end of 2022.