The amount of money a single person spends on rent has soared to its highest level in a decade.
New research by Zoopla found that rental affordability – meaning rent as a percentage of average earnings – is now at 35 per cent for a single earner.
And the percentage is expected to edge towards 40 per cent, according to the property website.
Going up: The amount a single person spends on rent rises to its highest level in a decade, according to Zoopla
It said a single earner could soon be paying 37 per cent of their typical earnings to their landlord if rents continued to grow at 12 per cent in 2023.
However, it added that it did not expect rental growth to continue at such a fast pace.
Instead, it suggested that a ‘modest improvement’ in the supply of rental homes, along with a hit in spending power will see rental growth slow to 5 per cent next year.
It comes amid a cost of living crisis, with cash-strapped households facing a sharp increase in energy and food bills.
The average rent in Britain reached £1,175 a month in November, according to separate research by tenant referencing service HomeLet. It is an increase of 0.3 per cent on the previous month.
When London is excluded the average rent is £977 a month, up from 0.1 per cent on a month earlier. London rents are at an all-time high of £2,011 a month.
Tenants have several options when faced with growing affordability pressures. These include moving to shared rental accommodation to help spread the cost of renting for single person households and low earners.
The latest English Housing Survey (2020/21) shows that there is an equal split between private renters with multiple incomes – such as couples or multi-person households – and single earners, covering single people and lone parents.
Zoopla expects more house sharing in the face of high rents, with a particular squeeze on single-earner households.
Recent research from the Resolution Foundation found that there has been a steady increase in sharing, measured by the space per private renter, which has decreased by 16 per cent in the last two decades.
The percentage of salary typically spent on rent is now at 35 per cent for a single earner
More sharing will help boost rental growth in the short term, but the impact of this will start to slow in markets where this option has already been fully utilised.
Another option for single people is to live with their parents or a relative. Data from the Office for National Statistics shows that the number of young adults aged between 20 and 34 years old who are staying at home reached 3.6million last year.
Tenants could also downsize to smaller rental homes. Zoopla recently highlighted in a separate study that tenants are seeking small homes with an increase in demand for one and two-bedroom flats and a reduction in demand for houses.
Richard Donnell, of Zoopla, said: ‘A chronic lack of supply is behind the rapid growth in rents which are increasingly unaffordable for the nation’s renters, especially single-person households and those on low incomes.
‘Many are also staying put to avoid the worst of rent increases,’ he said.
‘Renters are having to adopt a range of strategies to deal with rising rents. Only a big increase in investment in the sector will ease the pressure on affordability and boost consumer choice. In the short term, we expect the growing unaffordability of renting to reduce rental increases in 2023 to 5 per cent.’
The financial squeeze on single earner households is likely to see more move to a shared tenancy agreement
Michael Cook, of letting agent Leaders Romans Group, said: ‘Currently there is simply not enough affordable housing in the market.
‘The sector has been filling the huge void left by an undersupply in social housing and Government needs to work with the many good quality landlords in the sector rather than against them.
‘They should be actively policing existing legislation, rather than continue a dual-pronged approach of new legislation and taxation, which is pushing much needed good landlords out of the sector and driving average rents due to a lack of supply.’
He added: ‘We will see the rental market reach a tipping point where the average monthly rent can’t go up anymore and still be affordable. The knock-on effect of this is that landlords will not receive monthly payments from tenants, which will impact their ability to pay their mortgages, and as for tenants, they will be left in a position of being unable to find affordable accommodation.
And David Reed, of estate agents Antony Roberts, said: ‘Action is needed now to address the continued shortage of stock brought about by landlords feeling less and less inclined to hold an investment property, let alone wishing to explore owning more property.
‘Quite simply, the more rental properties available, the less upward pressure on rents.’
