Striking a Balance
Unaffordable Rents? Not Quite
London headlines mask that many regions have more affordable rents than in 2007.
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The average rent on a one-bedroom home in Great Britain now accounts for 48 per cent of the average post-tax income of a full-time worker aged under 30. This is up just three percentage points from 45 per cent in 2007. Rents have increased by 27 per cent since 2007 outpacing a 16 per cent growth in incomes.
However, for more than half of the country the proportion of income taken up by rent is less now than it was in 2007. Despite rising rents over the last nine years, income growth in some regions has grown faster, which has softened the effect on rental affordability.
In the North East, the cost of renting a one-bedroom home accounts for 35 per cent of the post-tax income of an average young full-time worker, much lower than the 42 per cent it did in 2007. Here tenants have benefitted from a 32 per cent income growth, while rents have only increased by 11 per cent over the same period. The improvement in affordability isn’t just limited to the familiar cheaper Northern markets. The typically expensive South East & South West regions have also seen renting become more affordable for young workers. The proportion of income taken up by rent has fallen by 1 and 4 percentage points in the South East and South West respectively compared to 2007.
It’s a very different story in the capital however. The cost of renting a one-bed home in London now takes up 57 per cent of the post-tax income of an average full-time worker aged under 30. This is a 16 percentage point increase on the 41 per cent of income in 2007. Rents have risen by 48 per cent since 2007 more than four times as
fast as the 11 per cent increase in incomes and this has put tenants in London under increasing affordability pressure. As affordability has deteriorated in some regions, tenants have opted to reduce the burden by sharing. Since 2007, the proportion of one-person households in the private rented sector has decreased by 3 per cent, while four and five people households have grown by 2 per cent & 1 per cent respectively.
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