Renters under 30: How to approach the rent crisis
4 min | 7 November 2022
Getting started in the adult world can be tough. Can I land my dream job? How on Earth do you make new friends? Can I live on takeaway? Now, thanks to the state of today’s financial climate, there’s another basic question taking centre stage – can I afford somewhere to live?
Today, over a third of people under 30 are faced with huge rent bills. With rent demanding up to 60% of renters’ income, the other necessities of life are taking a back seat. And it makes the prospect of buying property even more slim.
The nationwide rent rise
Compared to 2019, people aged 30–59 years old are spending significantly more on rent this year. And affected the most are those under 30, where 40% of them are spending around a third of their income on rent across the UK. Though the highest squeeze of rent affordability is showing up in London, the problem extends across the nation, with some of the least affordable rents also appearing in Salford, Dudley and Rotherham.
In fact, a room-for-rent website found that in 40 out of the 50 largest UK cities, rent prices have hit record-breaking highs. For example, average rent prices in Truro, in England’s Southwest, have seen a £133 increase in just three years.
Why is it happening?
As with most complex issues, there are lots of factors that have led us here. Most pressing is the high demand versus low supply of rental properties on the market. For the approximately 4.4 million private renters in the UK, there’s fierce competition to secure a home. This often forces potential renters to put in offers above the listed price, and compete with masses of other hopefuls just for a chance to secure their new abode.
Add to that the obstacles landlords face in setting prices, while their own costs are rising. As interest rates continue to reach levels unseen in recent history, their mortgage repayments are swelling, along with the rise in taxes, cost of management, utilities and a slew of other necessary fees. So, raising rent is the only way for them to stay out of the red.
Now, if adults under 30 can barely make rent, along with their other bills, is the dream of buying their first home simply out of reach?
Property prices over the years
In the same way that rent is soaring, so too are property prices and mortgage fees. To put things in perspective, in the mid-90s, you could have bought a terraced house in London’s Zone 2 for under £70,000; and today, properties on the same street have increased by more than 10X – going for around £700,000 in 2020. That means for a 10% deposit today for one of these houses, potential buyers would need to cough up more than what was the total value of the house just a few decades ago.
Understandably, the huge sums needed for deposits, even with the help of 5% mortgage offers, seem out of reach for many right now.
So, what can be done?
I was fortunate enough to live with my parents while saving for my deposit, which allowed me to buy my first property in my late 20s. This could be a viable option for some, letting them weather the financial storm, while saving for their future home. However, this may not be feasible for many.
In a bid to mitigate some of these challenges, London Mayor Sadiq Khan has hopes to freeze rent for the next two years, saving the average renter £3,000. This may help halt the fire, but it doesn’t do much to put it out – especially since the entire country, and not just the capital, is ablaze.
Though the whole world is in the throes of the economic downturn, the story isn’t necessarily the same everywhere. With the rise of remote working, and the most advanced connectivity to date, your search for a home needn’t be limited to the city, country or even continent you’re in. With Vietnam, Cambodia, Bali and Bolivia taking some of the top spots for cheapest places to live, you may be able to find comfortable apartments in nice areas and live on less than $1,000 per month. For example, in Bolivia, rent for one-bed apartments start from as little as $200/month – and properties for sale start from around $85,000.
For those set on buying here in the UK, joining forces with a trusted group of friends could be a way to go. Generally, lenders will allow up to four people to be included on a single mortgage, making both the deposit, as well as the monthly fixed costs, more affordable.
Disclaimer: This article is for information only and does not constitute financial advice.