UK’s rental shame: Tenants paying four times as much of income as homeowners on housing

Exclusive: Spiralling costs disproportionately hitting those who don’t own their homes

Renters are now spending nearly four times as much of their income on housing as homeowners – in the latest sign of Britain’s worsening housing crisis.

Millions of people are now spending at least half their monthly salary on rent, with the average private renter giving more than a third of their wages to a landlord.

The revelation is the latest to expose the scale of the growing emergency gripping the UK.

Last month, an Independent investigation found that the majority of local councils had failed to build a single home in the past five years despite 1.2 million people on waiting lists.

And this newspaper branded the government’s homes plan “too little, too late” after housing secretary Michael Gove said a target to build 300,000 a year was never mandatory.

Labour said the figures showed renters were being hit by a double whammy of rising rental costs and the ever-increasing cost of buying a house, making home ownership an increasingly distant prospect.

The government says it is bringing forward reforms to renting, and already spends billions on housing support – but charities say a mass housebuilding programme is needed, along with limits on rent rises and more support for those hit hardest.

Renters are bearing the brunt of the cost of living crisis with a lack of affordable homes and out-of-reach mortgage costs pushing up prices, campaigners warn (EPA/PA)

A new expert analysis by the respected Resolution Foundation shows that renters spent 34 per cent of their incomes on housing costs in 2021-22, compared to 9 per cent for mortgage holders.

Cara Pacitti, senior economist at the think tank, said private renting remained the most expensive type of housing despite rises in costs for homeowners.

“Private renting remains the most expensive of all tenure types, despite continuing issues of quality and security. Average floor space per renter has fallen by a fifth over the past 20 years, while almost a quarter of private rental homes failed to meet the Decent Homes Standard in 2021-22, posing significant challenges to renters’ living standards.”

Private renters already pay the highest housing costs out of anyone, and they are the last group of people who can afford to absorb financial shocks. The government’s focus needs to be on helping tenants to weather this storm.

Polly Neate, chief executive of Shelter

Worryingly, evidence from charities working on the front line of the crisis shows the situation for renters is worsening faster than official statistics can keep track of.

Call handlers working for the housing charity Shelter told The Independent they were now dealing with people facing “crazy” rent rises as high as 50 per cent of what they were previously paying – while new tenants are forced by letting agents to take part in a bidding war for a roof over their head.

Citizens Advice, meanwhile, provided shocking figures showing a 200 per cent spike in the number of people seeking assistance to help battle evictions for non-payment of rent, rising from 300 cases in 2019 to 900 cases in 2023.

At the beginning of 2019, private renters who approached the charity were paying an average of £498 in housing costs, but that had risen to £631 by the start of this year.

Shelter’s most recent quarterly surveys of private renters found that 33 per cent (2.7 million people) are spending at least half their income on rent.

The figures, from the start of the year, also show that 48 per cent of renters have seen their housing costs increase in the past year and 22 per cent now struggle to pay it.

“We’ve been inundated with distressing calls from families that have been grappling with steep rent rises,” said Nadeem Khan, an adviser at Shelter’s helpline – adding that he was regularly seeing people cutting back on essentials to pay rent.

Some renters are being pushed out of communities they have spent their whole lives in (Getty)

“I spoke to someone last week, a single mother with two young kids, who told us that the landlord has raised their rent by about 30 per cent. She’s in tears when she’s telling me that her tight budget can’t keep up. She told the landlord – and he served her a no-fault eviction notice.”

The helpline also regularly hears from people who are being forced to leave their local areas because they can no longer afford the rents there, he said.

“Just yesterday I spoke to an elderly gentleman, which was particularly heart-wrenching because he’s lived in this neighbourhood for decades.

“The landlord has increased the rent: he’s told me he has to make a choice between putting a decent meal on the table or paying for the roof over his head – but he can only keep it up so long. So he’s now having to face this grim reality of leaving this place he’s called home for most of his life.”

The government pledged under prime minister Theresa May to improve conditions for renters by banning no-fault evictions – but years later the legislation, the Renters (Reform) Bill, is still making slow progress through parliament.

Ministers have since scaled back their housing targets for local authorities and ditched proposals for planning reform aimed at getting more homes built. They have also ruled out introducing any controls on how fast rents can rise, as are common in other European countries.

In contrast, the government has unveiled a package of measures to help mortgage holders with their costs. Banks have agreed to put a one-year grace period on repossessions and let homeowners reduce payments by either switching to interest-only mortgages for six months, or lengthening the term of their mortgage.

Labour’s shadow housing secretary Lisa Nandy told The Independent: “Renters are being hit by a brutal double whammy as the housing crisis goes from bad to worse.

“Rents are going up – alongside other costs like energy bills and food – which is reducing the amount that can be saved for a deposit, and at the same time the cost of buying a house keeps rising. All this is making the dream of homeownership ever more distant.

“We will build more houses, support first-time buyers with a mortgage insurance scheme, and bring in a powerful new Renters’ Charter to make renting fairer, more secure and more affordable.”

Lisa Nandy, shadow secretary of state for housing, said renters were hit by a ‘double whammy’ (PA Archive)

Polly Neate, chief executive of Shelter said the increased demand for private rentals “driven by years of government failure to invest in genuinely affordable social homes” was driving up rents.

“The government’s focus needs to be on helping tenants to weather this storm. It must end the four-year freeze on housing benefit, but to escape the storm clouds for good, the government needs to build a lot more social housing with rents tied to local incomes, so we are less reliant on private renting in the future,” she said.

Dame Clare Moriarty, chief executive of Citizens Advice, said many people could not cover their essential bills and risked “being sucked into a spiral of debt”.

“Our latest analysis is a sobering reminder that, despite cutting their spending back to the absolute minimum, too many people are simply living on empty. The government must look at ways of preventing mortgage holders and renters from falling further into the abyss,” she said.

Ben Twomey, chief executive of campaign group Generation Rent, urged the government to block unaffordable rent increases and build large amounts of social housing.

“A cost of renting crisis is forcing tenants to bear the worst of the economic turmoil right now. While many mortgage holders have yet to see their monthly payments increase, most private renters have already faced a rent hike this past year,” he said.

“The government’s response to this needs to put tenants first: prevent unaffordable rent increases and protect tenants in their homes if their landlord needs to sell. Tenants relying on benefits need their housing support raised to cover what rents actually cost, and, to meet demand, we need a massive programme of building, particularly of social housing.”

A spokesperson for the government’s housing and levelling-up department said: “We recognise people are facing pressures in the private rented sector, which is why we introduced the Renters (Reform Bill), delivering a fairer deal for renters and empowering them to challenge unjustified rent increases.

“Individuals struggling to pay their rent may be eligible for a range of financial support, and the most vulnerable households can apply for help with the cost of essentials, including energy bills. We have provided £2.5bn in funding for this since October 2021 and extended the Household Support Fund in England to 31 March 2024.”