The amount of people renting in the UK is increasing. One fifth of people in the UK now live in privately rented accommodation, doubling the numbers of 20 years ago. With the number of tenants on the rise, it’s important for tenants to understand how much rent they can afford based on income. This is why we’ve created a rent affordability calculator.
Enter your income in the calculator and it will show you the max amount of rent you should be paying per month.
If you’re paying too much rent based on your income, that’s not good news.
You could find yourself entering arrears due to missing rent payments. This will have a knock on effect, impacting your credit score & referencing history. Both of these factors will impact your ability to rent another property.
Rent affordability calculator
Alongside with how much rent you can afford to pay, the rent affordability calculator also shows you how long it’ll take you to safe for your own property.
The calculation of that is based on the average UK house price of £230,000 (plus stamp duty) and how much you can save a month.
Why has the number of rental properties increased
As alluded to above, the number of people has increased dramatically over the past 20 years. Below are some reasons why
Tenants are being priced out
In this day and age it’s difficult for some to get on the property ladder.
Prices have skyrocketed recently, although the growth is appearing to slow down
House prices in the UK rose 33 percent from 2010-2019 compared with 117 per cent in the previous decade
However, the increase still exceeded that of earnings, resulting in reduced affordability.
How long it would take you to buy your own home is included in the above rent affordability calculator. Simply enter how much you are able to save a month.
There has been increased scrutiny on mortgage approval since the 2008 financial crash.
More checks are done and affordability assessments completed.
Banks prior to the crisis, were handing out mortgages on a 120% LTV. Meaning they were lending more than the property was actually worth,
Now, it’s difficult to get a reasonably priced interest rate unless you have a 10% deposit saved. With the increase in house prices, this is difficult to obtain for some.
Renters need to stay on top of deposit saving hacks in order to move themselves onto the property ladder.
Working practices are changing in the UK. With companies setup up in a wider variety of locations and the chance for many to work freelance, settling down in one area may not be appropriate.
Instead, many workers now move from location to location depending on work available and rates being offered.
For such workers, buying a property may not be appropriate. Renting therefore is far more suitable.
There’s an increased amount of regulation landlords need to be compliant with as compared to 20 years ago.
Deposits safeguarding, safety checks and fee bans have all helped to protect tenants.
With this in mind, the fear of rogue landlords ripping off tenants has lessened.
Tenants now fee safer and protected, encouraging the rental option for many
With the increased competition between landlords as well as further regulation mentioned above, properties have improved.
With improved properties on offer, people are more inclined to be open to renting.
No longer do people have a ‘job for life’ and the cost of living is high in some parts of the UK.
As a result, committing to and purchasing a property for a large amount of money can be risky.
If mortgage payments are not kept up with, the property can be repossessed.
With renting, if income of a tenant was impacted, it’s much easier to vacate a property and move somewhere cheaper.
Getting married later
Millennial’s are getting married and starting families later in life.
As a result, settling down in one place and locking oneself isn’t appealing
Live where you want
People are now more selective of their lifestyle and where they want to live.
However where they want to live may not be affordable to buy. In such locations, there may be opportunities to rent. While the rent in such locations might still be high, its probably more affordable than a 20% deposit!
This ties into the lifestyle reason above. Attitudes are changing and many don’t want the hassle of dealing with mortgages, maintenance & insurance/property bills.
They’d rather this onus falls one someone else, the landlord.