Financially, life is very difficult right now. Unfortunately, for young people renting it is even harder. Well, really for anyone renting it’s difficult – but younger people tend to be less financially secure to begin with.
As inflation continues to soar, rental prices are no exception and are rising incrementally. Aside from the obvious short-term problems, rents increases have a number of negative implications that will affect young people for years to come.
With no immediate prospect of the situation improving, the difficulties for young people renting could become a much greater problem if not addressed early.
In this post I’ll cover:
- The current situation
- A closer look at the rental market
- Why this is a problem
- What the experts think
- What you can do
The current situation
While the market for buyers is becoming slightly less manic, the rental market is still very difficult.
The latest property figures show the number of new buyers coming to market fell once again in June and sales dropped.
At the same time, the number of properties for sale remained flat and house price increases slowed. The most expensive houses – those selling for £1 million plus – are starting to sell for below their asking price.
For young people renting, the picture is less positive.
Runaway rents are continuing. Demand is up again, but supply has fallen for the third consecutive month.
More worryingly, the majority of estate agents still think rents will keep rising over the next 12 months. This means the situation is unlikely to improve any time soon.
A closer look at the rental market
There are many reasons why the rental market is so difficult for renters.
But, most simply, it comes down to there not being enough properties for the number of people wanting to rent them. This means landlords can charge more as renters have to compete for properties.
One of the reasons for this lack of supply is landlords are selling up in large numbers. This is partly because they want to cash in on higher prices as the buying market appears to be reaching a peak.
However, many are also selling up due to the increase of legislation landlords are subject to.
A white paper – which was published in mid-June – is a vital step forward for tenants’ rights, but it does add more responsibilities for landlords. It also includes measures making it more difficult to raise rents. Of course, in theory this will be good news for renters!
But, if it persuades even more landlords to sell up, the picture might not be quite as straightforward.
The legislation also makes it more difficult for landlords to end a tenancy.
As a result, they are pickier about tenants, which means that anyone without a spotless rental record could find it increasingly difficult to find a home to rent at all.
Why this is a problem
Aside from the obvious worry that people simply won’t have enough money to pay all their expenses each month, there are other less obvious problems.
Struggling to pay rent or other bills as a result could have a serious impact on those who have previously never missed a payment.
Even a small blip on your credit score can make it very difficult to get a mortgage or take out a loan further down the line.
The more you spend on rent, the less you can save for a deposit or retirement. This is setting young people back even further on their goals and making it harder for them to achieve these goals.
What the experts are saying
Sarah Coles, a senior personal finance analyst at Hargreaves Lansdown, said: “The rental market remains red hot, and runaway rents continue to push costs up alarmingly for tenants.
“It’s yet another month when we’ve seen demand rise and supply fall, which is inflating rents alarmingly.”
If this trend continues, it is reasonable to expect rents will continue to rise at a quick pace.
What you can do
Firstly, you can try and protect yourself from rising rents.
If you can lock into a tenancy at a fixed price for a year now, it may well be a better option than waiting a few months. The situation only looks set to worsen for the time being at least.
For those already in tenancies, you could contact your landlord and see if they’re happy to agree a renewal price early. They may well be receptive to this as finding new tenants is a costly and time-consuming process for them.
If it’s an option, look to increase your income so you can keep saving. In the current climate, it is very reasonable to ask your employer for a raise. Equally, the labour market is tight right now. Many companies will be offering much higher salaries to fill vacancies, so it may be worth considering moving jobs.
I am also a big fan of side hustles. Anyone can start one and you’re fully in control of the income you earn.
Finally – this won’t be an option for everyone – consider moving back in with family. I moved in with my parents during the pandemic and it was a great decision. Even after contributing to bills and rent, I’m still saving far more than I would if I was still paying rent.
Don’t forget to follow me on social media @Katie20Percent to keep up to date with all my latest posts.
Did you know I offer freelance writing services and personal finance workshops and talks for schools, workplaces and organisations? I also regularly feature in the media. Get in touch via firstname.lastname@example.org or reach out on Twitter @Katie20Percent if you’d like to find out more.
If you found this post about the difficulties for young people renting interesting, please like it and share it on social media or with your friends. Are you worried about the rental market? What else could people do to help protect themselves from the rising prices? Comment your thoughts below, I’d love to hear them!