Declining number of home owners pushes total rent bill to record level

The struggle younger generations are facing to buy their own home has helped to push the total amount of rent paid by tenants in Great Britain to record levels.

There was a £1.8bn increase in the amount of money spent on rent in 2017 as compared to the year before, according to figures from Countrywide.

That took the total spend on rent to £51.6bn last year, it estimated.

The amount of rent paid by millennials (defined by Countrywide as those born between 1977 and 1995) fell by 2%.

However, the younger Generation Z (those born after 1995) spent £5.5bn on rent in 2017 — double what it spent the year before.

The total amount of rent paid by tenants has risen every year for the last decade, as the number of people renting has grown, Countrywide said.

Millennials have been paying the majority of total rent in Great Britain for the past 11 years.

In 2017, they paid 59% of all rent — a total of £30.2bn.

This is down from the peak of 64% in 2015, when they paid £31bn.

The figures suggest that more millennials are gradually buying their own homes and will account for a shrinking proportion of the total rent paid.

Meanwhile, older renters still make up a significant proportion of tenants, Countrywide said.

Last year, the baby boomer generation (born 1946-1964) paid £5.5bn, or 10% of all rent, which was the same as Generation Z.

Countrywide said this could be explained by the fact that baby boomers tend to rent larger homes in more expensive areas and pay more per month than any other generation.

The rate of rental growth in January 2018 remained unchanged from the end of 2017.

In January 2018, the average cost of a new let rose 2.4% on the same month a year earlier, unchanged from December 2017.

Excluding London, average rents across Great Britain rose 1.9%, compared to annual growth of 2% in December.

Countrywide said rental growth has accelerated in the capital, while Scotland, the south east, and the south west saw growth rates slow.

The north east was the only region to see rents fall.

Johnny Morris, research director at Countrywide, said: “The rental market grew in 2017. More people joined the rented sector and average rents increased, meaning 2017 saw the highest total rent bill so far.

“As millennials age, more are becoming homeowners, so the total amount they’re paying in rent has started to drop. But the Generation Rent title still applies. Any fall will be much smaller and slower than seen by previous generations as less become homeowners.

“For the second month running rental growth in London has outstripped the rest of the country. Stabilising rents in central London alongside rises everywhere else in the capital has pushed the rate of rental growth to the highest level for 22 months.

“While the rate of growth outside London remains higher than for most of last year, it has picked up to a lesser extent. Across northern England rent rises are running at half the rate of 2017.”

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