Rising rents force growing number of young people to stick with Mum and Dad

More and more young Britons are putting off leaving their parents’ homes because of rising rents, according to new data released by estate agent Hamptons.

It found that the share of tenants leaving the family nest has been steadily declining in the UK since 2015.

At the time, first-time buyers made up 6.1 per cent of all tenants moving into a new home, representing 71,860 new rental households in England.

In the first five months of 2023, that figure has fallen to 4.6 percent, which equates to some 43,280 new rental households in England this year.

Average rent in the UK has risen 10 percent over the past 12 months, reaching a record high of £1,213 a month in May, according to the rent index from HomeLet, the landlord insurance company.

Aneisha Beveridge, chief of research at Hamptons, said: “About 105,000 missing tenants rely on Mom and Dad’s hotel.

“The number of new tenants has been steadily declining since 2015, pushed down by the rising cost of living and record-breaking rental growth that has pushed affordability to its limits.

‘Young adults stay at home longer to save, some skip the rental market altogether and buy a home.’

The North-South divide

While the number of tenants leaving their family home has risen in the north over the past year, tighter affordability has put a cap on the number of potential tenants doing the same in the south of England.

So far this year, those who moved out of the family home made up 5.4 per cent of all tenants in the north of England, compared to 3.7 per cent of those who rented in the south of England, which includes London, East Anglia, the South East and the South West.

For young people living in Greater London, average rents are up 11.3 per cent year on year from £1,832 a month in May 2022 to £2,003 a month in May this year.

While Londoners are the least likely to leave the family home of any region in Britain, the capital is somewhat bucking the stay-at-home trend.

Despite London recording above-average rental growth, the share of tenants leaving family homes to rent in the capital has risen from 2.5% in 2022 to 3.2% this year.

Can young people afford the rental market?

Despite rising rents, affordability for young tenants has improved – at least on paper. This is because their wages have increased, so rent takes up a smaller portion of their monthly income.

The average pre-tax income of an 18-24 year old in the UK has increased by 42 per cent since 2015 to an average of £18,900, according to the Office for National Statistics.

Meanwhile, data from Hamptons shows that the average rent for a single room increased 26 percent over the same period, with a bedroom rising 30 percent.

This means the average young adult has spent 43 percent of their pre-tax salary on renting a room so far this year, up from 49 percent in 2015.

If these young adults rented a single bed, they would probably spend 64 percent of their income, up from 69 percent in 2015.

If they shared the cost with another full-time worker in a two-person or single-family home, the average single bed would consume 32 percent of total household income by 2023, up from 35 percent in 2015.

However, as inflation has risen 33 percent since 2015, it’s possible that any additional income for wage increases may have been eroded by the rising cost of living, meaning renters are likely to be in worse shape now than they were in 2015.

The good news for renters is that after two years of aggressive increases, rents may be starting to fall.

Data from Hamptons says the average rent of a newly let home in the UK rose 9.1 percent year on year in May, up from 11.1 percent in April.

In London, where rents have risen the fastest, according to Hamptons, a greater slowdown has occurred.

It says the average cost of a new leased property in the capital increased 13.3 percent year-on-year in May, up from a record 17.2 percent in April.

Beveridge added: ‘The good news for tenants is that rental growth is starting to cool and we expect this to continue for the rest of the year.

‘Average rents in the UK have risen by 47 per cent over the past ten years, underperforming by 69 per cent over the same period.

“The main problem, though, is that more than half of that rental growth has happened in the last four years — and that comes at a time when household incomes are under pressure from other rising costs.”