Nearly half of tenants struggle to pay rent with millions now facing ‘financial vulnerability’
Nearly half of tenants are struggling to pay their rent, with millions now spending more of their disposable income on renting costs than homeowners.
As the cost of living crisis has led many landlords to up the costs of rent, some 21 per cent of tenants report spending a higher proportion of their disposable income on paying for a roof over their head, compared to just 16 per cent of mortgage holders, according to fresh figures from the ONS.
Between early February and May 2023 a further 43 per cent of renters reported that it was difficult to afford their rent payments, and around three in 10 homeowners said they were also struggling to afford their mortgage payments.
As inflation still remains at a sticky 8.7 per cent, some 60 per cent adults reported that their cost of living had increased compared with a month ago.
Earlier in the year, it was reported rent averages more than £900 in London, while a recent City PM deep dive into Rightmove’s rental offering, found many sub-par properties are routinely going for more tha £1,200 in the capital.
It comes as the Bank of England has hiked interest rates for 13 consecutively times, which has led to high street lenders increasing the cost of mortgage deals.
This impacts landlords as their monthly payments go up, which may encourage them to increase rent for tenants to help with the costs.
It has also caused prospective homebuyers to put off borrowing for a mortgage, and chosing to rent instead, making the market more crowded, and forced rents even higher.
“The cost of living crisis has impacted society in various ways. The initial surge in energy costs led to significant government support through the Winter particularly targeted at the most vulnerable groups such as pensioners,” Paul McGuckin from leading independent consultancy Broadstone, said.
“However, now the pain is feeding into the housing market with mortgage rates soaring and causing knock-on consequences in the private rented sector. Today’s data not only reveals that a far higher proportion of renters are struggling to meet their monthly payments but are also significantly more likely to face financial vulnerability.”
He added: “In the midst of these immense, immediate pressures squeezing household budgets, employers are playing a bigger role than ever in helping workers deal with their financial and emotional wellbeing today while supporting them with their long-term financial goals, like pension accumulation.
“For those facing the most extreme issues in the current financial environment, it must seem like a case of no jam today, no jam tomorrow.”