Over the last few years, more and more people in the UK have resorted to renting a home in place of buying, thanks to spiralling house prices and a lack of housing supply. However, while this is certainly good news for landlords, the situation is less rosy for the UK's renting population, with the latest research from the National Housing Federation revealing that UK tenants pay some of the highest rents in Europe.
According to the figures, rents here in the UK siphon off the largest chunk of people's salaries and are some of the least secure in Europe. UK rents cost an average of £750 per month (€902), while the European average is almost half as much, standing at just £400 (€481). Even when comparing countries with similar individual earnings, UK rental prices are still rocket ahead – Germany and Holland, whose renters have comparable levels of income, pay just €600 and €625 respectively.
As a result of the higher prices, UK renters have to dedicate far more of their income to paying their landlord, with almost 40% of their income being designated for this purpose – a stark contrast to the 28% of income used to pay rent by our European counterparts. Consequently, the amount of disposable income that can be put aside in a savings account to put towards a house deposit is reduced, or even non-existent. This fuels the circle of renting, leaving UK tenants with little choice but to continue paying sky-high rents.
As well as paying "crippling" prices for rental properties, tenants in the UK are also faced with more insecure tenancy agreements. The research found that the UK rental market has some of the shortest tenancies in Europe: less than half of European renters (43%) have moved in the last five years, compared with more than three in four people renting in the UK (77%). Commenting on the finding, David Orr of the National Housing Federation, asked: "How can we expect people to raise families, start businesses or save for their first home if they don't even know where they will be able to afford to live?"
While the Government has pledged to focus on house building to stablise house price rises and boost rental competition, it will take some time for the issues to be addressed. So what can you do in the meantime?
Well, if you want to get on the housing ladder, it's time to get your savings in gear. Putting away even small amounts can enable you to build up a deposit fund, so try to make putting a little bit of cash aside a habit. A regular savings account can be ideal for this purpose, as it will encourage you to put some money away every month.
If you are only able to amass a small deposit, it may be worth checking out the best Help to Buy mortgages available. These deals require a deposit of just 5%, so they are perfect for those who are struggling to build a huge sum of money.
Tenancy costs may well be sky-high, but if you budget carefully and manage to put some money aside, it may still be possible for you to break the rental cycle and get onto the housing ladder.
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