By Mark Fairlie
Thursday, May 3rd, 2018 is “rent freedom” day in England, according to BBC News. It now takes a middle-income earner 86 days’ worth of work to pay a year’s rent after tax and National Insurance has been deducted.
86 days is the average length of time to achieve rent freedom in the UK as a whole. There are regional variations – for example, in Wales it’s 71 days, Scotland 79 days going right up to 165 days in London (183 in Newham). Certain parts of southern England “cost more to live in that some European capitals”, the BBC states.
A mixed picture nationally
Renters in London, the East of England, the South East, and the East Midlands have had to work longer to reach rent freedom day since 2011 – an additional 15 days in London and an extra month in Bristol to afford a two-bedroom property.
At the same time, those in the rest of the country now earn the equivalent post-tax of their annual rent bill in a shorter time with the North East of England seeing the sharpest fall of 8 days.
Not just the young affected
Whereas much media attention has been focused on the steep decline in the number of first-time buyers across the country, the problem is not confined just to younger adults, according to the National Housing Federation.
CityAM reported that there were now over 1.1m people over the age of 50 renting their properties, a near doubling of the number since 2008.
40% of the 1.5 million council homes sold through the Right To Buy scheme are now rented privately, according, at rates higher than would be charged if the homes were still under public sector ownership. In the early 1980s, 31% of the population lived in social housing compared to 17% today.
ITV show, This Morning, claimed after an investigation that 250,000 women “were being offered free or discounted rent in exchange for a sexual favour in the UK”, as reported in the Independent.
What’s stopping more homes from being built?
Although disputed by some, many believe that the price of housing and the associated rental levels will fall if Britain embarks on a once-in-a-generational home building program for a sustained period.
The UK needs to build 685 homes a day to meet the housing shortfall, according to Aldermore Bank as reported in the Mortgage Finance Gazette. If this target is not met, then Britain will have 318,632 fewer homes than it needs in 2020. Looking further beyond that point, conveyancing search provider Search Acumen who, using official figures, forecast there will be a shortfall of 1,000,000 homes by 2022.
The charity Age Partnership also report a reluctance on the part of those approaching retirement to sell their home to downsize with only one in ten planning such a move. One in twenty households with those approaching or at the age of retirement are planning to use “equity release”, an expensive lifetime loan which allows homeowners to withdraw cash based upon their home’s higher value, to raise £61,000 to cover living expenses.