Young renters need to earn £40,000 to live in London: SpareRoom   – Mortgage Strategy

Young tenants need to earn a £40,000 salary to be able to rent a room in London, data shows.  

The old rule that renters should be able to afford accommodation for around 30% of their gross income “is no longer an attainable affordability threshold for many under 30s,” a study from flatshare website SpareRoom says. 

The gross median annual wage of 18 to 21-year-olds working full-time is £22,001, or £1,833 per month, and £31,200 for 22 to 29-year-olds, or £2,600 per month, according to the latest Office for National Statistics data. 

“That means, according to the ‘30% rule’, rent budgets should not exceed £550 a month and £780 a month respectively,” says SpareRoom. 

It adds that the average price of a room for rent was £753 a month in the third quarter of this year. 

But the study shows that the average monthly accommodation budget of 22 to 29-year-olds at £780 a month prices them out from living in London, where average rent is £995 a month, requiring a £39,804 salary. 

It adds that the same is true of several key UK cities, such as Edinburgh with average monthly rents of £887 requiring a £35,480 salary, Oxford with rents of £823 needing a £32,920 salary, Bath with rents of £816 requiring a £32,640 salary, and Cambridge with rents of £800 needing a £32,000 salary. 

The study says: “A middle-earning under 30 with a [rental] budget of £665 a month would have to ‘find’ an additional £1,056 per year to cover the UK average rent.”  

One of the effects of these costs is a less mobile younger workforce, which hits economic growth. 

“One third of men and 22% of women aged 20 to 34 years old lived with their parents in 2024, and the overall number rose 9.9% in the decade from 2014,” the report points out. 

It adds that cost-of-living pressures weigh on this age group who have moved out of the family home. 

SpareRoom says 22% of under-30s had used overdrafts and 17% had taken on second jobs to help pay their rent — higher figures than older age groups, it finds from an earlier August survey of almost 3,800 renters. 

SpareRoom director Matt Hutchinson says: “In reality, the 30% affordability rule has been unrealistic for a long time. When rents are 40% or even 50% of income, as is more common today, affording them is challenging and saving for a deposit is out of the question.  

“This doesn’t just delay life plans. If you can’t meet unexpected costs outside of normal expenditure then you’re more prone to debt.” 

Hutchinson points out that the government’s wide-ranging Renter’s Rights Bill, which is soon due to become law, will address of these problems – but not all. 

He adds: “Not everyone can save a deposit equivalent to five weeks’ rent, and many parents can’t afford to help either.  

“The Renter’s Rights Bill seeks to ban the practice of asking for rent in advance — sometimes as much as 12 months’ worth — which will level the playing field.  

“Tenants will also be able to challenge annual rent increases, which can be reduced if the proposed rent is deemed to be above the market value. 

“But that doesn’t tackle the biggest challenge of all, which is that market-value rents are already way too high.”