Tenants are shelling out record rents, making the situation even worse cost of living Crisis for them, according to new data.
They paid out a total of £31bn in rent in the first half of this year and are on track to pay out £63bn for the full year.
Hamptons figures show that total rents have more than doubled since 2008 due to rising rents.
The average monthly rent is now £1,163, down from £1,069 at the same time last year.
Hamptons says tenants paid out a total of £31 billion in rent in the first half of this year
Hamptons has also revealed that total rental bills are expected to reach £63bn this year
The total estimated rental bill has surpassed the 2017 peak, although there are around 275,000 fewer private tenants than five years ago.
In the first half of 2022, tenants paid £750m more in rent than in the same period of 2017 and £17.3bn more than in the first half of 2018.
Looking at rental costs across generations, Hamptons said rising bills are hitting Gen Z — those born between 1997 and 2012 — hard as their members fly the nest.
Generation Z paid a record £5.8bn in rent in the first half of this year, a number that is likely to reach £11.7bn over the full year.
This means that for the first time they are paying more rent than baby boomers, defined as those born between 1946 and 1964.
Hamptons’ Aneisha Beveridge said: “As Gen Z fly the nest, they have seen their rent payments increase tenfold in the last three years, meaning they are now giving away a fifth of all rent paid.
“Generation Z is entering the rental market faster than any previous generation, largely because fewer young people are likely to become homeowners.”
The Hamptons estate agent has disclosed the total amount of rent paid by various groups of tenants in the UK
Rent paid by different generations of tenants has been revealed by Hamptons
Generation Z’s rent bill is rising faster than it was when the previous generation started moving out during the 2008 downturn. This generation were the Millennials, born between 1981 and 1996.
On the current Gen Z path, they will likely pay more than Millennials over the next three years.
All other generations spent less on rent than in the previous year.
Millennials, who currently make up the largest generation of renters, paid £2.4 billion less in rent in the first half of this year, or 18 percent less than the same period a year ago.
The millennial rent bill has fallen by almost half – to 49 percent – since 2017 as many renters bought their first home in their mid-20s to early 40s.
Despite falling homeownership rates over the past two decades, Millennials are likely to pay less overall rent next year than their predecessors – Generation X, who were born between 1965 and 1980.
The pace at which older generations’ rent bills have been falling shows that the decline tends to slow after about a decade.
If someone hasn’t bought a house between the ages of 40 and 45, they’re typically much less likely to buy one later in life. This means that Generation X tenants who have not yet bought are less likely to do so.
According to the study, the total amount of rent paid by millennials is likely to have bottomed out within the next five years.
Historically, each generation’s total rent bill has peaked at about double the last, buoyed by both rising rents and falling homeownership rates.
This would suggest that past trends will see Gen Z’s rental bill grow to around £70bn in around six or seven years.
However, since homeownership rates have remained relatively stable over the past six years, it is likely that their total rental bill will peak below this figure as more people buy their first home.
How much does it cost to rent across the UK?
Hamptons has revealed the average rent for newly let properties across the UK
Rental growth rates fell slightly in the early summer months.
Average rents across the UK rose 8.8% over the last 12 months, slowing growth from the 11.5% recorded in May.
For the second month in a row, rents in London rose faster than anywhere else. They are up 12.1 per cent over the last 12 months, taking the average monthly rent above £2,000 for the first time ever.
Inner London rents posted a record annual growth rate of 35.1 per cent as their strong recovery from the pandemic continued at a rapid pace.
Despite record growth, inner London rents remain 6.5 per cent below their October 2019 peak and just 1.6 per cent above where they were in January 2020, at a monthly average of £2,675.
Across the UK, the number of rental homes on the market remains well below pre-pandemic levels, with 54 per cent fewer homes on the market than in June 2019.
However, stocks are now slowly rising across southern England – with the exception of London – compared to this time last year. And there is 10 percent more rental housing in the country than in June last year, albeit up from record lows.
Older generations have shown that as a renter reaches middle age, they become less and less likely to ever become a homeowner
Aneisha Beveridge said: “Fast rental growth will see tenants handing over a record £63bn in rents in 2022, the first big jump in five years.
“Almost all of the increase has come from record-breaking rents driven by a shortage of apartments available for rent, while investors pass higher utility costs on to tenants.
“Landlords, in particular, have come under pressure from rising mortgage interest rates and higher insurance premiums and maintenance costs.
She added: “It will take a significant increase in homeownership rates over the next five years to stop Gen Z from paying more rent than Millennials, which seems unlikely as interest rates and house prices continue to rise.
“Older generations have shown that by the time a renter reaches middle age, it becomes increasingly unlikely that they will ever become a homeowner.
“For many, deposit remains as big a barrier to purchase as it was in their 20s, while getting a mortgage becomes harder as lenders are wary of extending a mortgage well into retirement age.
“This usually means progressively shortening the term, driving up monthly payments and acting as a barrier to homeownership.”
Renters are now paying an average of £177 a month more than when the pandemic began
Separate research showed this week that rents are rising at the fastest rate in 16 years
Renters are paying £177 a month more than at the start of the pandemic, according to Rightmove, as average rents outside of London hit a record £1,126 a month.
That means they are now rising at the highest annual rate on record since records began 16 years ago. Rents are up 19 per cent since March 2020, the equivalent of £177.
It’s the latest evidence of how rental prices have risen during the pandemic. It took eight years to reach the same level of growth before the pandemic struck.
The 3.5 percent increase this quarter is the second-highest quarterly increase in a decade, Rightmove said. She based her analysis on asking rents.
Rents in London also continue to rise, reaching a new record average of £2,257 a month this quarter.
Annual growth in advertised rents in London is now a staggering 15.8 per cent, the fastest ever.
The increases are attributed to a lack of rental properties combined with high tenant demand.