A website has claimed that rising rents and deposit requirements mean even the rental market will soon be out of reach for many, never mind home ownership.
Money.co.uk calculated that in 10 years’ time the average rental deposit could reach £1,111; this equates to 70% of the average Brit’s monthly income at £1,576. In London, deposits are projected to rise to £2,733, sucking up 120% of one month’s average salary at £2,281.
The site claims that landlords will be asking for the equivalent of six weeks’ rent as a deposit by 2026 while monthly rental costs will rise by over a quarter (28%) to £1,111 in the same time period.
Overall, rental inflation is estimated to outstrip the average increase in monthly salaries across the UK which is projected to grow by an average of just 20% over the same period.
Money.co.uk predicts that deposits will rise sharply across the whole of the South of England. In the South East the average deposit is estimated to hit £1,469 in 2026, representing over four-fifths (83%) of the average monthly salary at £1,761 - up from 72% in 2015. In the South West it’s a similar plight with the average deposit estimated to represent 80% of median monthly earnings (£1,437) by 2026 - up by 14 percentage points from 66% of the average salary in the region in 2015.
Hannah Maundrell, editor-in-chief of money.co.uk said: “The rapid rise in deposits as well as rents is a double blow for everyone on the rental ladder. With the forthcoming changes to tax legislation and crackdown on buy to let mortgages likely to erode landlords’ profits, there’s little doubt these costs will be passed onto tenants. The current booming property market” means deposits are likely to continue shooting upwards in the future, and we could well see six weeks’ worth of rent extended to eight.
“Tenants are stuck between a rock and a hard place and the situation is only likely to get worse. Many not only face being priced off the property ladder but also the rental ladder too. This could force people to borrow the extra cash they need for a deposit on loans or credit cards, pushing up the cost and creating a perfect storm for a major renting crisis. Maybe the bank of mum and dad should prepare itself for another withdrawal? Or, we could see many left with little choice but to live with their parents well into their 40s.
“The Government needs to take action, without intervention the spiralling cost of deposits and rent could have a huge economic impact on the UK. Giving renters a lifeline is equally as pressing as helping people buy a house. Taking steps to address this now could be a far easier solution than dealing with the prospect of pricing home hunters off of the private rental ladder.”