Data shows that young tenants need an annual salary of 40,000 pounds to rent a room in London.
Old rules, which stipulated that renters should be able to afford accommodation at around 30% of their gross income, “are no longer the affordability threshold for many people under 30,” according to a study by the flat-sharing website SpareRoom.
According to the latest ONS figures, the median annual gross salary for 18 to 21-year-olds working full-time is £22,001, or £1,833 per month, and for those aged 22 to 29 working full-time, the median annual gross salary is £31,200, or £2,600 per month.
“This means that, under the ’30 per cent rule’, your rental budget should not exceed £550 and £780 per month respectively,” SpareRoom said.
It added that the average room rent in the third quarter of this year was £753 per month.
But research shows that 22 to 29-year-olds have an average accommodation budget of £780 per month, putting them out of reach of living in London, where the average rent is £995 per month and require a salary of £39,804.
The report adds that this is also the case in several major cities in the UK, such as Edinburgh, where the average monthly rent is £887, requiring a salary of £35,480; Oxford, where the average monthly rent is £823, requiring a salary of £32,920; Bath, where the average monthly rent is £816, requiring a salary of £32,640; Cambridge, where the average monthly rent is £800, requiring a salary of £32,000.
The study said: “Middle-income people under 30 years old [rental] A monthly budget of £665 would have to “find” an extra £1,056 a year to cover the average UK rent. ”
One impact of these costs is reduced mobility of the young workforce, thereby impacting economic growth.
The report states that “in 2024, one-third of men and 22% of women aged 20 to 34 will live with their parents. The overall figure has increased by 9.9% over the ten years since 2014.”
The report adds that cost of living pressures are weighing on people in this age group who are moving out of their homes.
SpareRoom said a survey of nearly 3,800 renters earlier in August showed that 22% of under-30s used an overdraft and 17% had a second job to help pay rent – a figure higher than that of older age groups.
SpareRoom director Matt Hutchinson said: “The reality is that the 30% affordability rule has long been unrealistic. When rent accounts for 40% or even 50% of income, as is more common today, affording rent is a challenge and saving money is impossible.
“Not only does this delay life plans. If you can’t afford unexpected expenses outside of your normal expenses, you’re more likely to go into debt.”
Hutchinson noted that the government’s wide-ranging tenants’ bill of rights, set to become law, would address these issues, but not all.
He added: “Not everyone can save a deposit equivalent to five weeks’ rent and many parents are unable to help.
“The Tenants’ Bill of Rights aims to level the playing field by outlawing the practice of demanding rent in advance, sometimes up to 12 months’ rent.
“Tenants can also challenge annual rent increases and have the rent increases reduced if the proposed rent is deemed to be above market value.
“But that doesn’t solve the biggest challenge, which is that market value rents are already too high.”
