One in 10 private renters find housing costs ‘barely manageable’ or ‘unaffordable’, research has found.
The Tenant Trends report from mortgage market research firm Pegasus Insight revealed 8% of tenants in the private rental sector said their monthly payments were ‘barely manageable’, while 2% said they were ‘unaffordable’.
These respondents said they were falling behind in their rent, and some suggested they would need to move soon.
A third said their rental payments put pressure on their budget.
Some 46% of respondents said their rent was manageable and they could afford it comfortably, while 11% said it was ‘very affordable’ and well within their budget.
The report found that over the last year, two-fifths of renters had to choose between paying their rent and other essentials, with 29% saying this was an occasional concern and 12% having to make this decision regularly.
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Younger tenants, aged between 18 and 34, as well as those either working multiple jobs or unemployed were more likely to be in this position.
Younger people bouncing back from rental arrears
Younger private renters were also more likely to be part of the 10% of tenants who missed a mortgage payment in the last year, with 13% in this position.
Meanwhile, a fifth of all respondents said they had been “hit hard” by the cost-of-living crisis.
On average, respondents who were behind with rental payments were two months in arrears.
However, younger respondents were more likely to recover, with 79% now back on track with payments, compared to 51% of those polled who said they were hit hard by higher costs.
Private renters seeing higher costs with letting agents
Half of the people questioned said their rent had risen in the last year, and just 1% said it had come down.
This was more likely for people renting through a letting agent, with 61% saying so, compared to 54% of people renting directly through their landlord.
On average, rents increased by 14% or around £100 per month. The main reason tenants were given for rental increases was inflation, as cited by 39% of respondents.
Despite the increasing costs, 81% of private renters still believed their rent was good value for money. Some 35% of respondents said their rent offered ‘average’ value for money, 29% felt it was ‘quite good’ and 17% said it was ‘very good’ value for money.
Just 14% of renters said the costs represented ‘quite poor’ value for money and only 5% said this was ‘very poor’.
Mark Long, managing director and founder of Pegasus Insight, said: “This research highlights some of the discrepancies at play in the private rented sector (PRS), with a minority of tenants facing genuine economic hardship, many financially stable but making sacrifices to cover their rent and others taking repayments in their fiscal stride.
“The 10% who are struggling may need landlord forbearance – the figures suggest that many tenants given a little breathing space do indeed catch up on missed payments relatively quickly. This may give some comfort [to] those landlords concerned about the Renters’ Rights Bill, which will lengthen the period between non-payment of rent and the potential commencement of the eviction process from two months to three.”
He added: “But overall, this research serves to illustrate the resilience of tenants in the private rented sector, with the vast majority keeping up their repayments, despite half experiencing chunky increases in rent over the past year. What’s more, despite these record rises, the fact that 81% are still content that their rent represents value for money strikes a resoundingly positive note.
“These insights are just a fraction of the results revealed in our latest Tenant Trends research report. We will continue to track tenant profiles, rental experience and future plans. We believe that a deeper understanding of tenant finances, attitudes and aspirations is key to evolving the PRS and supporting those landlords who supply it.”
