If you're a tenant, you're probably already feeling the pressure of sky-high rent costs eating into your budget. Unfortunately, it doesn't look as though that pressure will ease any time soon, with many landlords expecting to hike up rents in the months to come – which could lead to tenant finances being even more stretched.
A new report from TheHouseShop.com warns of a ticking time bomb in the rental sector, with many tenants simply being unable to afford any planned increase in rent. The report cites figures from Kent Alliance which show that 40% of landlords plan to raise their rents by an average of 5.6% in the next six months, while 56% of landlords questioned by the Residential Landlords Association (RLA) plan to do the same in the next year.
In both cases, the majority blame recent Government legislation and changes to tax relief, and are passing on the extra costs incurred to their tenants. However, this could signal a true crisis for the tenants themselves, with TheHouseShop.com's research finding that 42% of respondents simply wouldn't be able to afford an increase of 5% in their monthly rent costs.
Indeed, the survey found that even an increase of 1% (equating to just £7.79 per month based on average UK rents) would be unaffordable for 16% of respondents, with many already stretching themselves and paying the upper limit of what they can afford. A further 26% wouldn't be able to afford an increase of up to 3%, going completely at odds with many landlords' plans.
"We all know that the rental market is highly competitive right now, and tenants' budgets are already stretched to breaking point," said Nick Marr of TheHouseShop.com. "Therefore the prospect of any further rent rise is a real concern, and as our research shows, even a relatively minor increase in monthly rent payments could push tenants over the edge.
"This demonstrates that there is a ticking time bomb in the Private Rental Sector and with the number of people renting from private landlords already at a 30-year high - we could quickly find ourselves in a very precarious position with wide-ranging consequences for both tenants and landlords up and down the country."
However, a particularly interesting finding from the research was that mortgage-holders would be far better able to cope with a rise in monthly payments than renters, with just 3% saying they couldn't afford an increase of up to 1% and only 9% saying they couldn't afford a hike of up to 5%. Indeed, 24% said that their payments would have to rise by more than 20% before they become unaffordable, highlighting that mortgages could, in fact, be far more affordable.
This could be due to the fact that mortgage rates are at record lows – rather than a difference in financial profile between renters and buyers – so in many cases, monthly mortgage repayments will be far cheaper than average rents. So is it time to start saving up for that all important deposit?
It may seem difficult, particularly when rent costs already take up huge chunks of income, but it can be done. Read our guide on saving up for a house deposit, and hopefully your budget won't be quite so stretched for much longer.
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