By Daniel Hunter
One third (34%) of young adults (aged 18-24) struggling to make it to payday blame rent payments for their money problems, according to research by R3, the insolvency trade body.
While homeowners are benefitting from record-low interest rates, the difficulty of getting onto the housing ladder and escalating rent payments appear to be causing serious damage to the financial health of young adults.
By comparison, fewer than one-in-five (18%) over-35s struggling to make it to payday attribute this to rent payments. Just one-in-six (16%) adults struggling to make it to payday blame their mortgage for their problems.
“Without action to increase the supply of housing or to curb rent increases, our youngest generation of adults — known in some quarters as ‘Generation Rent’ — will continue to be forced to get by with one hand tied behind its back," R3 president Liz Bingham said.
“Rent is a fundamental expense for those not fortunate enough to own their own home, but for many young adults it’s an expense too far.
“The degree to which 18-24 year olds struggle with rent payments dwarfs older age groups’ rent concerns. It’s difficult to see how this generation — and future generations — of young people can build a long-term financial platform for themselves if so much of their income goes straight towards their monthly rent bill.”
According to the long-running survey of average rents in England and Wales from LSL Property Services, average monthly rents in May 2013 (£737) were 3.5% higher than May 2012. Over the same period, inflation was 2.7%, while, according to the Office of National Statistics, three-month average UK weekly earnings rose just 1.7% to £476.
R3’s latest research also found that 11% of 18-24 year olds concerned about their current level of debt are worried about their rent arrears.
“It is very concerning that a not insignificant proportion of young adults are falling into debt just to put a roof over their heads. This is not a sustainable state of affairs," Bingham added.
Rent concerns are most acute in London, where 35% of all those struggling to make it to payday blame rent payments for their problems. This is followed by the South East (29%).
“A lack of housing throughout the country, but particularly in the capital, has maintained house prices well outside the reach of those on low incomes. This is forcing people towards the rental market where heavy demand is driving up rents," said Bingham.
“With thousands of young people caught between a housing market they can’t access and a rental market they can’t afford, the pressure will soon end up on the ‘bank of mum and dad’ or social housing providers.”
Rent payments are the third biggest cause of all GB adults’ financial problems, with 22% of those surveyed by R3 blaming rent payments for their financial difficulty. This is behind the rising cost of living (67%) and credit card repayments (25%).
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