On average, the cost of renting a one-bedroom home in Britain is £746 per month, which makes up nearly half of the average income!
That’s according to new research by estate agency Countrywide, who also suggest that renting in line with income is more affordable than it was in 2007.
A big chunk of your income
It seems those living on their own are losing out on more of their income to stay in rented accommodation. Renting the average one-bed home in Britain takes up 48% of a young full-time worker’s wages, while a pair living together and working full-time spend an average of 27% of their post-tax income.
Those living in London are, perhaps unsurprisingly, worse off, with the average cost of a one-bedroom home reaching £1,133 per month. This means a single full-time young worker forks out nearly two-thirds (57%) of their income on renting. Sharing the rent with a partner or housemate lessens the cost, taking up a much lower 35% of their post-tax income.
Rent costs across the whole of Britain rose by 2% on last year, to an average of £945 per month in May of this year.
Saving for a home of your own
While you might not necessarily want to be renting, it can be tough to save up enough for a deposit to buy your own home when you’re stuck paying rent each month. Considering nearly half of a young full-time worker’s income goes on rent, it’s no wonder that it’s getting harder and harder for Brits to buy a home of their own.
But that’s where government schemes could help. The Help to Buy ISA* offers you 25% on your savings up to a maximum of £200 a month. This means, for every £200 you save each month, you’ll get an extra £50 from the government, and they’ll pay you up to £3,000 in total. You can find out more about the scheme here.
On the other hand, it’s also good to weigh up whether you’re ready to commit to a mortgage at this stage of your life. If you’re still in your early 20s for example, you may not feel certain about whether you want to tie yourself down to a mortgage.
If you have any doubts about whether you’re ready, it’s a good idea to give it some careful thought first – there’s no rush! And remember, you can use this time to save up so you’re as prepared for buying your own home (when you want to) as you can be. Why not take advantage of the Help to Buy scheme in the meantime?
*It was reported in August 2016 that the government bonus on Help to Buy ISAs cannot be included in the initial deposit on a home, but is paid once the sale has completed. Find out more here.
Disclaimer: All information and links are correct at the time of publishing.