As the UK increasingly homes a growing number of renters, research from a youth charity suggests renting remains unaffordable for working adults aged between 21-25.
According to the Resolution Foundation, the definition of affordability relating to rent is that it shouldn't cost more than 35% of a tenant's income. However, the research by the End Youth Homelessness (EYH) charity shows that even in the most affordable regions of the England, for tenants aged between 21-25, the average monthly rent comes in above that figure.
Further highlighting the problems with affordable renting is news that one London borough council is set to invest £10 million to purchase former council-built homes that were sold to council tenants under the Right to Buy scheme. While the Government remains committed to building more homes across the UK, this potential move underscores there simply aren't enough affordable homes available for council tenants to rent in the English capital.
Affordability Index
As many tenants struggle to pay their rent amid the restrictions in place due to the pandemic, a recent piece of data from EYH shows that for some young adults rent is unaffordable even if they’re working full time. According to the charity’s affordability index, the average rent in the private rental sector (PRS) across all English regions is unaffordable for all young adults aged between 21-24 who earn the minimum wage of £8.20 per hour living and renting in England
Even rents in the most affordable regions of Liverpool and Hull cost 38% of a minimum wage salary, making it unaffordable according to the Resolution Foundations definition. Meanwhile, looking at the least affordable region of central London, the average rent equates to 251% of a minimum wage salary for young adults. Looking at the average English rent in the PRS, those same young people on minimum wage, rent comes in at 71% of their earnings – more than double that affordability definition.
“This new data lays bare the urgency of the housing dilemma faced by many young people across the country,” said EYH’s Managing Director Nick Connolly. “The prohibitive costs associated with private renting are forcing the most vulnerable young people into desperate situations and COVID-19 has pushed even more young people closer to homelessness.”
EYH has entered into a partnership with the Yorkshire Building Society to try and help young people manage their finances and afford to rent a home. There are also other options. At Rent Guarantor our technology helps us provide a professional rental guarantor for many different tenants, including young workers. We give tenants and landlords peace of mind that rent will always be paid no matter what comes up and help ensure young people live in a safe place they can call home.
Rising Rental Costs Too High for Hackney Council
It’s not just young tenants who find the cost of renting too high. Hackney Council’s plan to buy back 25 council houses through a £10 million investment has received approval. It will see the London Borough council, who says that rents charged by Local Space in partnership with another London council, Newham, are too high for its residents requiring temporary accommodation, buy up 25 former council homes to house those in need, but in a more cost-effective way.
Once the 25 properties have been purchased by Hackney council, they will then be rented out at social rent levels, which are more affordable compared with private rents.
This latest development highlights that even though Local Space was created to provide temporary accommodation for those facing homelessness and also for key workers, their rents – which increase annually at the average UK rate of inflation – are still considered too expensive for those struggling to find and afford rental accommodation in the English capital.
“These are Council homes that were built to provide a safe, secure and genuinely affordable place to live for local families who need them most, and I’m delighted to be bringing them back for this purpose,” said Deputy Mayor Cllr Rebecca Rennison, Cabinet Member for Finance, Housing Needs and Supply.
This move by Hackney borough council may come as a surprise however, it only highlights how dire the housing situation is for many. The borough also remains committed to building new homes, with almost 2,000 new homes and three new schools planned by 2022.
With rental affordability still under pressure, even more housing needs to be built to provide the variety of homes with a range of rental levels and prices to accommodate Britons across all walks of life.
