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Rental Property Ladder Becomes Harder to Climb

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Despite increasing market prospects for the property sector as a whole, concerns have been raised as the overall affordability of rental properties; this time, not solely within the reputedly-expensive London area.

As of present, the majority of private sector landlords have a stated requirement of some four weeks’ worth of rent before handing over the keys which, given increases in the average rental price of such properties, is beginning to raise similar concerns of affordability as have been seen in those relating to getting onto the property ladder. In fact, the average rental deposit has been predicted to increase by approximately 40% by 2026, hitting a colossal value of £1,111 which, though seemingly far smaller than the costs of getting onto the property ladder, may put people off approaching the rental ladder, even as a temporary measure.

With the average monthly rental deposit then, based off these predictions, sitting at around 70% of the average monthly wage, the difficulty of individuals getting their own property in any shape or form is seemingly on the rise. Yet, there are considerable regional variations in this percentage, as reported by the Centre for Economic and Business Research.

In London, where affordability has always been of great concern, it has actually been reported that the average rental deposit may reach up to 120% of the average monthly wage, serving as a stark 99% increase on last year and no-doubt putting concerns in the minds of many individuals looking to move or break away from home.

Additionally, research has also highlighted that more and more landlords will expecting deposits to be of closer to six weeks’ worth of rent in the coming times, this then adding to the burden of those looking to get onto the rental ladder.

With these growing prices, reduced affordability and barrier to enter onto the rental market, it begs the question how the market will react. Will getting onto the rental market be too much of a burden for some? As the major benefit of rental over purchasing a property lies within the affordability, these changes may very well change the landscape of the rental and property sectors entirely. Only time will tell, however.

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BDC 317 : Jun 2024