Renters Face Highest Costs in a Decade as Rental Prices Outstrip Income Growth

The proportion of British household income spent on rent has reached the highest in a decade, with tenants spending 28.3% of their pre-tax earnings on rent in May 2021, according to a Zoopla report.

This represents the 19th month in a row that rental price growth outstripped incomes.

The cost of renting is particularly high in London, where rent averages 40% of gross earnings.

The "chronic imbalance" between supply and demand continues to push up rental prices, but Zoopla expects affordability strains to slow the pace of rental growth in 2024.

Homeowners and prospective buyers are facing rising mortgage rates due to high inflation and strong wage growth, with the Bank of England expected to raise its Bank Rate to 4.75% on Thursday.

Mortgage lenders have already repriced or pulled home loan offerings in recent weeks.

Renters have already seen a 2,820 pounds ($3,597.19) a year increase in rental costs over the last five years.

The number of people struggling to pay their rent has also risen, with 15% of renters finding it very difficult to pay, up from 10% in the six months to November.

Just under half said it was easy or very easy.