Tenants were dealt another punishing blow this month, when it was revealed that rents are rising at the fastest rate for more than two years. Those renting privately saw prices rise by 6.3% per cent in the last three months alone, with no signs of a slowdown. The average rent across the country is now £816 per month, with the rate significantly higher in major cities across the South-East. More worryingly, wages and living costs show no signs of keeping apace with soaring rental prices.
In fact, rents have risen twice as quickly as the cost of living in the last fifteen years. Perversely, if they’d risen in tandem, private tenants would be in the luxurious position of only having to work a four and a half day week, rather than the 40+ hours per week that today’s stretched tenants are more used to punching in. Campaign group Generation Rent has calculated that if the median rent had risen at the same rate as the cost of living, it would now stand at £98.28 per week, annually saving the average rental household £1,546 - which adds up to an extra half day of work per week for the typical renter.
Meanwhile, salaries have also lagged behind rent during the same period, rising at 48%, or about a third of the rate of rental increase. As a consequence, more and more ‘boomerang’ graduates are forced to move back into their family home. An estimated 2 million people in the UK between 18 and 34, or 26% of young people, still live with their parents.
Experts warn that it’s imperative that those who’ve found the funds and are brave enough to take the plunge and dive into the increasingly expensive rental world set themselves a realistic budget and stick to it. In addition to ensuring that they live within their means, first time tenants should also remember to factor in bills, insurance, travel costs and council tax when they’re determining how much they can afford to spend on rent each month.
Steve Ranger of The Tenant Shop notes:
"We feel that the best way to reduce household outgoings is to perform price comparisons regularly and at key events in your life. Moving home is definitely a key event and it is for that reason that Tenant Shop have been contacting new tenants since 2008 in order to offer price comparisons for their phone, TV, broadband & energy needs, ensuring they are on the best rate/tariff for their new home"
Canny tenants know that living with flatmates, rather going it alone, is the best way to reduce rental outgoings. Shopping around for the best bank account, phone tariff and utility deals, as well as taking advantage of Orange Wednesdays, two for one restaurant deals and walking or cycling to work are all additional ways of trimming back living costs that should be second nature to smart renters. Because, although the rental rates are soaring, so too are property prices – surveys suggest that property prices rose by 8.6% at least in the most popular areas of the country. This means that today’s tenants need to cut costs and save smart if they have any chance of going from renting a property to owning one.
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