Tony Ward is chief executive of Clayton Euro Risk
New data from the National Housing Federation suggest that Britain has the highest residential rents in Europe with our private renters paying almost double the average European rent.
Britons typically spend almost 40% of their salaries on rent compared with a European average of 28%, the analysis reveals. This means that British rents average £750; in Europe, it’s a much more sustainable £400. In Germany and the Netherlands, where earnings are largely similar, private rents are about 50% cheaper than the UK. And of course, it’s worse in London where rents now average £1,461 a month and tenants pay at least 40% of their take home pay on housing costs.
Given the shortage of housing stock in the UK, this doesn’t surprise me: landlords will inevitably exploit the housing crisis and look to get the best return. It’s the old demand-supply theory at work. However, what does worry me is the UK market also has the shortest tenancies in Europe, thus creating uncertainty for renters.
The data reveal that, across Europe, 43% had moved in the past five years, but in the UK this rose to 77%. I empathise with David Orr, the federation’s chief executive, when he noted that ‘British renters get a raw deal’ and have ‘almost no certainty about whether they will be able to stay in their home from one year to the next’.
Hardly surprising then, as noted in a previous blog, that property is ‘out of reach’ for average salary earners. And for those dreaming of saving money for a deposit by renting, this looks like an impossible aspiration.
The solution? Sorry to bang on but I will say it again. More homes need to be built, specifically focused on the demographic demands of our society to address the chronic shortage of supply. This will help both those who wish to buy as well as those wanting to rent.