- Odd News
By Becky Barrow, Business Correspondent
PUBLISHED: 02:56 EST, 17 May 2013 | UPDATED: 02:58 EST, 17 May 2013
Costs: The cost of rent is fast outstripping wage rises, leaving many tenants struggling financially
Rents are rising nearly five times faster than wages in a toxic combination which is crippling millions of households, a report reveals today.
The average rent in England and Wales has jumped to £736 per month, a rise of 3.9 per cent over the last year, according to a report from the owner of Britain’s biggest lettings agencies.
But the jump, equal to an extra £27 per month, means rents are close to an all-time record.
The rise comes at a time when workers are being hit by cripplingly low pay increases.
On Wednesday, the Office for National Statistics said the average worker is getting a pay rise of just 0.8 per cent, nearly five times slower than the rate at which rents are going up.
With wages rising at just 0.8 per cent but rents rising at 3.9 per cent, the squeeze on families is painful, particularly when all their other bills, such as energy and food, are also rising rapidly.
For Londoners, the situation is even more acute, with average rents rising by an inflation-busting rate of 7.6 per cent.
David Newnes, director of LSL
Property Services, which owns the lettings firm Your Move and Reeds
Rain, said tenants are having a nightmare because wages are ‘seriously
He said: ‘Rents everywhere are higher than a year ago at a time when pay has crept up at the slowest rate in years.’
In London, it costs an average of £1,110 per month to rent a property, a bill which only the well-paid or the wealthy can afford to pay. The high of cost of renting in the capital is forcing many workers to travel long distances to get to work every day because they cannot afford to live in the city.
Wages: Average pay has gone up just 0.4 per cent during the past year compared to a 2.8 per cent increase in inflation. The fast rise in rents will compound the misery for many households
A growing army of commuters travel from counties such as Hertfordshire, Surrey, Oxfordshire, Kent and Essex in order to work in London, but pay a cheaper rent out of the capital.
The headache for tenants is that they are spending so much money on renting that they have little chance to save for a deposit to buy a home of their own.
The Council of Mortgage Lenders recently said its own research showed there is overwhelming evidence that the majority of Britons want to buy, rather than rent.
During a grilling by MPs investigating the rental sector, Paul Smee, director general, said: ‘The British aspiration to own your own home remains very strong.’
Pressure: Household budgets are also being squeezed as the cost of food and other essentials outstrips average earnings (Source: ONS)
It found 79 per cent of people ‘want to own their own home within the next ten years’, including people who currently own a home and hope they will still own a property in a decade’s time.
It comes after the Planning Minister, Nick Boles, described the collapse in homeownership in Britain as ‘truly frightening’.
The majority of couples who both have a job and plan to start a family typically want ‘to own a little house with a bit of garden’, he said.
But he raised his fears that millions of couples cannot fulfil this most basic of dreams, and their children, nephews and nieces will be trapped in the same net in the future.
Mr Boles said: ‘We can’t surely believe that it is right that we are saying to two partners who are both working that it is an unrealistic ambition for them to want to be able to own a little house with a bit of garden for when they have a couple of kids.
‘It was a reasonable ambition for most people for most of the last 40 years. So are we really willing to say that we are going to go backwards?’