As a rule, experts recommend you send no more than 30% of your post-tax income on housing expenses. This threshold includes rent and utilities, such as electricity, water, and phone bills.
However, in 2017, a study found the average UK household spent 42% of their income on rent alone. This figure rose to 72% of households in London, with young people and those with low incomes suffering most. The study also estimated that workers under 30 spent roughly 50% of their post-tax income on rent. Yet these figures continue to rise at a worrying rate.
Public sector workers such as teachers, nurses and police officers are facing rising rents on a daily basis. After being forced to accept below-inflation pay increases (teaching has seen "real term" pay fall by £3 an hour, while police officers face a £2 decrease), rents have continued to rise above the cost of living. As a result, integral public service professions are being priced out of the capital.
"The last five years has seen rental affordability ratios deteriorate. [In the UK] the amount spent on rent over this period has grown by 8%, while at the same time earnings growth remains relatively weak and below levels seen before the financial crisis."
Affordable rent should account for no more than 30% of an individual's post-tax income, yet in London, workers in their 20s now spend over half their incomes on rent.
A study by the Institute for Fiscal Studies provides even more worrying figures. Nearly 40% of young adults cannot afford to buy one of the cheapest homes in their area, even with a 10% deposit. The IFS revealed that house prices in England have risen by 173% over two decades; however, the average pay for 25-34 year-olds grew by a meagre 19% over the same period.
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