Misery for tenants as cost of renting continues ‘to climb across the UK’

The average tenant in the UK is spending almost half of their monthly net income to cover the average cost of rent, new research shows.

The latest figures on the cost of renting from the Office for National Statistics (ONS) was released earlier this month showing that rents in England have increased to their highest level on record.

Based on the latest data, research reveals that the average tenant in the UK is spending 47% of their monthly net income of £2,039 to cover the average cost of £959 in rent.

At a regional UK level, tenants in London are paying the most, with 62% of the average London salary required to cover the monthly cost of renting. In contrast, tenants in Wales and the South East are paying less than half that (30%).

However, when breaking the UK down on a local level London takes a back seat to Oxford where the issue of rental affordability is concerned.

With a monthly net salary of £1,946 and rental costs coming in at an average of £1,588 per month, tenants in Oxford are spending 82% of their monthly income on renting.

James Forrester, managing director of Barrows and Forrester, which carried out the study, said: “The latest figures show that the cost of renting has continued to climb across the UK. This will put even further pressure on tenants who have largely seen the income available to them fail to keep pace with this growth.

“While London remains the most expensive part of the rental market where outright cost is concerned, rental affordability is relative to income and in this respect, Oxford is the worst place to be a tenant at the moment.”

LocationAverage rent (pm)Net salary (pm)Rent as % of net salary
London£1,644£2,63962%
South East£999£2,25144%
South West£818£1,86644%
East of England£862£2,12441%
Scotland£748£1,94438%
West Midlands£671£1,89435%
Northern Ireland£627£1,79835%
East Midlands£639£1,88434%
Yorkshire and the Humber£614£1,83134%
North West£629£1,88533%
North East£542£1,79930%
Wales£539£1,79230%
United Kingdom£959£2,0394%

There are a further 17 areas of the UK where the average rent accounts for 60% or more of the average monthly income, with the capital accounting for 14 of these least affordable rental markets.

Hackney is the least affordable of all London boroughs and second least affordable behind Oxford, with 78% of the average income spent on rent.

Outside of London, Exeter (67%) Brighton and Hove (66%) and Epping Forest (60%) also make the list of least affordable rental markets.

Forrester added: “A string of government changes to the buy-to-let sector has dampened the financial return for many landlords in an attempt to address wider issues within the property market. Unfortunately, the knock-on effect of this is that a number of landlords have left the rental space, reducing the stock available to tenants and increasing rents even further.

“We need to reverse this trend in order to meet the high demand for rental properties if we are to attempt to reduce rental prices.”

Least affordable rental markets

LocationAverage rent (pm)Net salary (pm)Rent as % of net salary
Oxford£1,588£1,94682%
Hackney£1,842£2,36078%
Westminster£3,046£4,03875%
Lambeth£1,908£2,56574%
Newham£1,453£2,00772%
Haringey£1,669£2,35071%
Camden£2,302£3,38768%
Brent£1,502£2,21768%
Exeter£1,201£1,80167%
Barking and Dagenham£1,208£1,81667%
Brighton and Hove£1,360£2,05466%
Hammersmith and Fulham£2,117£3,20966%
Ealing£1,569£2,43165%
Southwark£1,718£2,71763%
Islington£2,003£3,19563%
Enfield£1,292£2,114.9661%
Epping Forest£1,369£2,261.6161%
Barnet£1,499£2,498.0860%
Least affordable rental markets

Least affordable rental markets excluding London

LocationAverage rent (pm)Net salary (pm)Rent as % of net salary
Oxford£1,588£1,94682%
Exeter£1,201£1,80167%
Brighton and Hove£1,360£2,05466%
Epping Forest£1,369£2,26261%
Bath and North East Somerset£1,223£2,05060%
Bristol£1,175£1,97460%
Midlothian£1,084£1,88757%
Cambridge£1,250£2,18657%
East Lothian£1,084£1,94956%
Three Rivers£1,280£2,34755%
Mole Valley£1,268£2,32754%
West Oxfordshire£1,108£2,03854%
Harlow£1,006£1,85354%
Crawley£1,004£1,85654%
Chiltern£1,455£2,74453%
Least affordable rental markets excluding London

More affordable housing must be provided for the heroes of this crisis

The housing market must be reformed to support the essential workers we have relied on throughout this crisis, writes Elspeth MacKenzie

January feels a long time ago now. But just five short months ago, the UK entered 2020 with a stable economy, employment levels recorded at over 76%, and a housing market that had its strongest start to a year since 2015. 

As a sector we had challenges on the horizon, but with strong finances and risk mapped strategies we were geared up to overcome them. 2020 was to be the year the social housing sector delivered quality homes and services at scale in every corner of the UK.

But the arrival of coronavirus has changed the outlook of 2020 for everyone. We are now facing one of the most extraordinary periods in our history: a global pandemic that has infected hundreds of thousands of people as well as crippled health systems and choked economies throughout the world.

The crisis has brought with it a real reckoning for society, creating opportunities for us to pause, rethink and refocus on what – and who – is important to each of us. We’ve seen a rise in the importance placed on ‘society’ and a clearer recognition and support for the people that play such an important part in our daily lives – often quietly, invisibly, and all too often forgotten. 

It’s been visible to so many that over the past few weeks the UK’s response to the global pandemic has been fought by an army of essential workers, each playing their vital part on the frontline of the battle. 

These essential workers are our teachers, NHS staff and care workers. They are also our engineers, train drivers, refuse collectors, postmen and women, delivery drivers, retail assistants and farm workers. In their thousands, these workers have sacrificed their own safety so that we can focus on keeping safe at home and seeing through this pandemic. 

Not since World War II has the battle for the UK’s survival been fought for so many by so few. 

But through all this good, the crisis has also shown us that our housing market isn’t working. Too many of these essential workers – the true heroes of the coronavirus battle – lack the housing that they deserve.

Housing policy should neither be a one size fits all or prioritise one need over another, instead it should focus on supporting all housing needs in all their forms. 

We should resist calls to return to our roots and instead look to grow these roots so that we can scale up and foster a housing market that meets the needs of the many not the few. 

If we start from the principle that everyone deserves a high-quality home that is affordable to them – from a single-parent family to a low-paid student nurse or an experienced transport engineer on a medium income – then we can begin to focus on what is important and target support where it is needed.

Too often they have been priced out of their local housing market and forced to accept accommodation that isn’t fit for purpose or battle with long commutes into their places of work.

Historically, housing policy in the UK has focused on the need to build a safety net for the most economically vulnerable in society. Though we have done this with some varying success, we have built a safety net for some and allowed others to fall through the cracks.

Housing policy should neither be a one size fits all or prioritise one need over another, instead it should focus on supporting all housing needs in all their forms. 

We should resist calls to return to our roots and instead look to grow these roots so that we can scale up and foster a housing market that meets the needs of the many not the few. 

If we start from the principle that everyone deserves a high-quality home that is affordable to them – from a single-parent family to a low-paid student nurse or an experienced transport engineer on a medium income – then we can begin to focus on what is important and target support where it is needed.

The solution may be increasing the supply of council housing, reducing the barriers to shared ownership, increasing the income threshold for affordable rent or scaling up the private rented sector. 

Or it could be some combination of all of these, where the local demand can be supported by the right tenure. 

Above all, the housing sector needs to find innovations to meet its local demand, to do so we need more freedoms and less top-down control. We need to build the right homes, set the right rents and respond to our local demand. 

In some areas of the country this will mean providing more truly affordable rents, while in other areas it will mean increasing the supply of shared ownership where there is local demand. 

Whatever the solution, it is paramount that the housing sector emerges from the coronavirus pandemic with a renewed focus on delivering high-quality homes that are affordable to all in society and never again leave anyone forgotten or behind.

Elspeth MacKenzie, chief executive, Thrive

The biggest mistakes first-time house buyers make

Buying your first home is an incredibly exciting process as the prospect of getting on the property ladder and moving up in the world is a right of passage many enjoy walking.

However, there are many hoops you need to jump through as a first-time buyer and some of the obstacles may be much bigger than you first thought.

There are a number of traps which many people also fall into, costing them their chance to buy a home for years.

If you are thinking about buying a home for the first time or you are already in the process, make sure not to make any of the following mistakes.

Don’t try to get a loan mid-way through the buying process

When you are in the middle of buying a home, a complex process of checking your finances will be taking place between your selected mortgage provider and the credit agencies.

This is in place to ensure that you will be able to pay the money back to the bank you are lending.

That is why, under no circumstances, should you compromise your lending or major finances during this time.

Even though you may think that taking a loan from another bank to pay for your new furniture is unrelated, this could be the difference between your bank accepting your mortgage or denying it.

This is because your financial situation and outgoing payments will change halfway through the financial checks, which could instantly void everything.

Not paying attention to your credit score

Your credit score is critical for buying a first home, if it is too low, you will get rejected for a mortgage. It’s that simple.

There are a variety of things you can do to increase your credit score, but the first thing to realise is how important it is.

Click here to read a comprehensive article if you do not know what a credit score is and how to improve it.

Get a ‘Mortgage in Principle’

A mortgage in principle is an agreement between you and your lender which demonstrates that you have the finances and agreements in place to pay for a home when it comes down to a potential bidding war.

Many people do not get a mortgage in principle as it is not a requirement to buy a home, but this can cause serious problems as people may not know they will fail in getting an agreement until much later in the process of viewing homes and settling on a property to purchase.

Failing to use rental payments to build credit

If you are paying rent to a private landlord and not making use of a credit agency to register the transfer, you are missing out on vital points being added to your credit score.

This is something that our experts can provide more information on, as even if you are thinking of buying a property in five years time, this is something which you should be thinking about now, so make sure to get in touch.

Why House Prices Will Continue to Increase in the UK

Despite the promise of thousands of new homes being built in the UK to ease the impact of rocketing prices, they continue to rise across the UK.

London is the epicentre of the housing crisis, which has developed over the past 20 years. The average price of a house in the London borough of Kensington and Chelsea, the most expensive borough in London, is over £1.3 million.

But even in the cheapest boroughs, house prices have been on the rise for a long time.

Since the beginning of the 1980s, the population of London has increased by more than 2 million inhabitants and in the next 20 years, it is forecast to increase by at least 1.5 million.

This will inevitably continue to create demand for homes and increase their value.

Here are more reasons why house prices will continue to rise in the capital and the rest of the UK.

Growing population

It’s not just the fact that more people are moving to the big cities, it’s the fact that the population is getting older and net migration continues to attract more people to the UK compared to those leaving it.

Remember, the UK is a very small country even compared to our European neighbours such as France, but the population figures are very similar. This means that there is a lot less land to build homes.

So just like London, space is at a premium across the UK.

Transport Links

The best example to use to highlight the impact of transport links increasing the value of homes in an area, is that of Crossrail.

12 years ago, the route of the new Elizabeth tube line was announced, with brand new stations being built at a cost of at least £1 billion each and a total cost of at least £18.25 billion.

This caused an overnight explosion in house prices around the likes of Hanwell and Forest Gate.

Recently, the High-Speed Rail 2 project was also given the stamp of approval by the UK government, connecting London with Birmingham and Manchester with lightning-fast trains which will reduce journey times significantly.

As a result, it is inevitable that house prices will rise further in these transport hubs.

Inflation

Inflation is a natural economic process which happens as an economy grows and more wealth is distributed. Over the past 40 years, the proliferation of technology and access to information has allowed brand new industries to be created and hundreds of billions for the likes of Mark Zuckerberg, Jeff Bezos, Warren Buffet and Bill Gates alone.

The equation is simple, if there is more money for everyone, the cost of food, shelter and transport will also increase.

This has naturally caused an increase in the price of almost everything in the developed world.

Even despite the ongoing Coronavirus outbreak, the global economy will continue to grow in the long term as more and more innovations are discovered and technology progresses.

This will lead to even more wealth being created, further rises in inflation and further rises in house prices.

How to Improve Your Credit Score with your Rental Payments

If you are looking to buy a house, one of the most important things to consider is your credit score, which will be used by banks to determine whether you get a mortgage or not.

For many first time and young buyers, this can be a problem.

Credit scores are based on a number of factors which contribute to a score out of 100, which if too low, will mean you can’t buy a home.

There are a number of things which you can do to improve your credit score, such as paying off your credit cards on time and ensuring that all of your direct debits are paid on time, such as your bills.

However, even if you do all of these things, it may take months for your credit score to increase by a few points.

But did you know that you can use your own monthly rental payments to increase your credit score?

Let’s be honest, nobody likes paying rent, especially if you live somewhere like London where sending £800 to a landlord really drives the concept of ‘dead money’, home.

Paying rent via direct debit to a private bank account does nothing for your credit score.

However, using a credit agency to ledge your rental payments on your behalf will.

Effectively, if you set up a line of credit with an agency and pay them your rent each month, they will then send the money on to your landlord. The amount of money stays the same and nothing really changes, except that your money will now be registered and the money you pay rent will be on record when a credit check is made.

This does not happen if you simply pay a landlord directly.

It’s a ‘no brainer’ for people trying to get on the property ladder as millions of people get trapped in the endless cycle of paying rent without getting anything more from their money.

If you would like to understand how to make use of this service, get in touch with a member of our team.

Three Benefits of Modern Methods of Construction

Technology and construction methods have not stopped evolving for the past 10,000 years. Ever since mud huts and caves were what our ancestors called ‘home, we have been improving, innovating and redefining how and where we live.

The Egyptians, Mayans and Aztecs built structures which were so mind-bendingly complex, scientists are still unsure of how they achieved such complex work 5,000 years later.

And in slightly more recent times, construction methods have enabled the completion of projects such as the building of the Burj Khalifa, the tallest building in the world and Crossrail, the biggest infrastructure project in Europe.

But the benefits of modern construction methods aren’t just reserved for awe-inspiring megaprojects, they’re widely used in the development of real-estate projects all over the world and likely to be used in the construction of your home one day.

1. Water Recycling

Greywater is the water you use to wash the dishes, wash your hands and shower.

Usually, this water is sent off to treatment plants along with sewage which runs out of every household, however, as greywater is significantly easier to clean and recycle, many real estate developments are now being built with their own treatment facilities, allowing water to cleaned and used again in quick succession, meaning no wastage is created.

Furthermore, homes are also being build to harvest rainwater to further improve the use of water, which is set to become a much more valuable commodity as the impact of global warming takes effect over the next 50 years.

2. Energy Harvesting and Storage

Over the past ten years, the cost of solar panels has dropped significantly while their effectiveness has increased. This means that many modern homes and buildings are constructed with in-built energy harvesting technologies, reducing the need for fossil fuels to generate power.

Coupled with the improvements in heat retention (such as triple-glazed glass) homes are vastly more efficient than those built a decade ago.

3. Construction at Speed

As we have all observed amid the COVID-19 outbreak, entire hospitals can be constructed in a matter of weeks as opposed to years.

This would not have been possible without radical developments in construction methods and technology over the past 20 years. Materials such as concrete and steel are significantly stronger and durable than they used to be, meaning less of it is required to support buildings, making it possible to build faster.

These developments in construction and technology are being used to produce housing and major real estate projects at a higher rate than ever before.

These benefits will be key for improving living standards and reducing the impact of construction on the environment over the next century, though with the development and use of artificial intelligence growing in the construction industry, it’s likely that construction methods will change way beyond what we think is possible in the future.

There is a ‘massive amount of pent-up demand’ in the rental market

The UK lockdown has been essential for containing the spread of coronavirus, but it is causing major disruption and distress, so when can it be lifted?

There are huge decisions for the government to make, as it looks to balance saving lives today with long-term damage to society.

But as soon as the lockdown is eased, whenever that may be, there will be a major release of pent-up demand in the letting sector, according to ARLA Propertymark’s CEO David Cox.

“There’s clearly a massive amount of pent-up demand in the market. Our message is just put everything on pause – don’t cancel it. The first Friday out of lockdown is probably going to be one of the biggest moving days in the lettings industry’s history,” he said during a webinar hosted by Goodlord yesterday.

Cox went on to caution against forgetting wider legislative changes scheduled for 2020. “Sooner or later, the government is going to go back to its normal course of business”, he warned, citing the need to be prepared for the abolition of Section 21, Electrical Safety Regulations on new tenancies – which he noted would still be coming into effect on 1 July – and the Regulation of Property Agents (RoPA).

He also believes this crisis will drive further legislative change that landlords and agents must prepare for and urged the industry to be proactive.

Cox continued: “[Post-crisis] I think they’re going to be looking at more regulation of landlords. I think we will go into a much tougher regime on property standards. We are trying to get out ahead of that with the concept of a property MOT; if we can try and shape what comes next, it’s going to be much easier for the industry to accept than to have a whole collection of laws thrown at us like we have over the past 10 years. Let’s get out in front of it, so we’re on the front foot.”

Long-term, Cox believes this crisis “is going to change the market quite significantly”, with many of the old ways and industry habits falling by the wayside as a result.

DWP suspends Universal Credit rent arrears deductions

The Department for Work and Pensions (DWP) has announced that Universal Credit rent arrears deductions have been suspended amid the coronavirus pandemic.

Third-party deductions, which typically see claimants have money they owe taken from their monthly benefit allowances, will be scrapped until 10 May.

Universal Credit claims have increased sharply as Covid-19 batters the economy.

More than 1.4 million have applied for the benefit in recent weeks, according to the government, which recently took the decision to suspend evictions until June.

A spokesperson for the DWP said: “We have received an unprecedented number of new benefit claims and have streamlined our operations to make sure people get the support they need during this time.

“As part of this, we have temporarily paused third-party deductions from [Universal Credit] – these will recommence on 10 May.

“We are in the process of explaining the changes to claimants via their online journal and to third parties, including housing providers who collect arrears via this method.”