After breaking records in July, rents remained sky high in August - topping the £1,400 threshold for the second month in a row.
The cost of renting surged by 7% year-on-year in August, bringing the average to £1,438 across the whole of England, Goodlord research shows.
This is despite rents dropping by 2% month-on-month. A similar reduction happened between July and August last year, so this may be a seasonal effect rather than a sign that competition in the rental market is dropping.
William Reeve, chief executive of Goodlord, said “rental cost figures from the last two months closely mirror the trends we saw in 2023; a big surge upwards in July, with August figures dipping slightly but staying very high overall. Rents are now up 7% year-on-year, but salaries have only recorded a 1% uplift across the same time period: this is really putting the squeeze on tenants, with many likely to be facing affordability issues when they come to renew or take out a new lease.
With interest rates starting to drop and tenant incomes failing to keep pace with rents, there’s a strong argument that we may be nearing a sustainability ceiling on the cost of rent. If they escalate any further, prices will prove simply unaffordable for renters – unlocking a challenging new chapter in the housing crunch.”
On an annual basis, rents in the South West have risen by a huge 13% year-on-year, followed by the East Midlands and North East, both of which saw an increase of 9%.
The West Midlands and Greater London saw the smallest year-on-year rental increases, with jumps of 2-3%.
In terms of short-term increases to rents, they surged by 12.2% in the past month in the South East, as well as by 4.9% in Greater London and 4.3% in the West Midlands.
However they saw a big monthly reduction of -23% in the North West, as well as moderate falls of 8.1% in the South West and -6.8% in the North East.
Rents so high they make mortgage-saving nearly impossible
One in 10 UK tenants are now spending at least 60% of their take home salary on their rent, according to a PropTech firm.
Canopy analyses data from over 46,000 individual, employed UK renters, and claims that the majority of UK tenants are at the limit of what some experts define as ‘affordable’.
The firm claims that spending around 30% of income on rent is typically considered affordable. It says that based on its data, on average UK tenants are spending just over a third (35.7%) of their net income on rent.
Around one in five (19.3%) are spending at least half of their salary on rent: one in 20 tenants (4.4%) spend over 80% on their share of the rent.
The UK city with the highest rent to income ratio is Bournemouth, with the average tenant spending 46.9% of their salary on rent.
Tenants in Brighton spend 46.3%, and London 44.3%, Edinburgh (40.6%). Within the top ten, the only city in the north of England was Manchester.
The north east of England boasts the most affordable cities for renters, with Sunderland (32.8%) and Newcastle upon Tyne (33.7%) both sitting in the top three list. Northern Ireland’s capital, Belfast was also named as a more affordable location, with a rent to income ratio of 33.1%.
London is the least affordable region of the UK for renters, with the average tenant spending 44.3% of their take-home pay on their share of the rent. The South West (44.1%) and South East (41.1%) are close behind as the most unaffordable regions in the country.
Chris Hutchinson, chief executive at Canopy, comments “the average tenant in the UK is now spending over a third of their take-home pay on their share of the rent; in many areas of the UK the average rises higher than 40%. It is sobering to see that some tenants are even spending 80% of their salary on rent. Considering these numbers don’t include essentials like groceries, commuting costs and utilities bills, the figures raise serious questions on how feasible saving for a mortgage is for the majority of tenants in this country.
What is clear is that the market is in a precarious position, in that steps clearly need to be taken to make life easier for tenants, yet further regulation is likely to drive landlords away from the market and leave a smaller pool of properties available for tenants to choose from.”