The amount of rent paid by under 45’s each year increased by £3.5bn between 2023 and 2024 to a record total of £56.2bn, Hamptons monthly lettings index reveals.
Under 45’s now pay two-thirds (66%) of all rent in Great Britain, up from 64% in 2023 and back to pre-Covid levels.
Over the last 12 months, the number of under 45’s renting privately rose by 149,000 across Great Britain to a total of 3.4m.
This increase equates to around 40% of the people who, over the last decade, bought using the Help to Buy scheme.
The total amount of rent paid by the under 45’s has risen 59% over the last 10 years, which Hamptons says is a reflection of rising rents rather than an increase in the number of younger tenants.
Meanwhile, despite rising rents, the over 45’s are now collectively paying £716m less in rent than they were a year ago, which is mainly due to the fall in the number of older renters.
The number of over 45’s renting privately decreased by 79,000 over the last 12 months.
Hamptons says these older households, generally with larger savings, are more likely to be able to buy in a world of higher interest rates.
However, over the course of the last decade, the total amount of rent paid by those over 45 has almost doubled (up 98%), rising from £14.7bn to £29.1bn.
By the end of 2024, the total amount of rent paid by private tenants in Great Britain had risen to a record £85.4bn, £2.8bn up on 2023’s total.
Slower rental growth and a limited rise in the number of tenants kept this increase modest in comparison to recent years.
The annual change marked the smallest increase in four years and only around a third of the hike recorded in 2023.
Of the increase in 2024, 60% came from rising rents, while the other 40% came from the slightly higher number of renters.
Nationally, the cost of moving into a rented home rose by 2.0% over the last 12 months, the smallest increase since October 2020, which Hamptons says reflects rents rising from an already high level.
In December 2023, rental growth stood at 10.2%. Average rents have risen by 31.2% in Great Britain since October 2020, from £1,042 per month to £1,367, costing the average tenant an extra £3,912 per year.
There were more rental homes on the market in 2024 than in 2023, with numbers up 10% annually.
However, Hamptons notes that there are strong signs that the recovery in stock levels has peaked, given numbers were up 34% year-on-year back in January 2024.
The number of homes on the market still stands 13% lower than during the same time in 2019, a figure which has trended downwards in more recent months and is likely to put pressure on rental growth in 2025.
Hamptons head of research Aneisha Beveridge says: “Higher mortgage rates have clipped the wings of many young aspiring homeowners in the last couple of years, meaning Millennials increasingly outnumber older generations in the rental market.”
“Renters face saving for longer and earning more to borrow similar amounts of money to buy a home. Just like rapidly rising house prices, higher interest rates will keep younger generations of tenants renting for longer.”
“For most of the last decade, the government’s flagship Help to Buy scheme played an important role in transferring tenants from the rental market into homeownership.”
“However, the record rise in the number of younger renters over the last year highlights the impact of higher mortgage rates and the need for a similar scheme if the government wants to achieve its ambition to help more people become homeowners.”
“The pace of rental growth continues to cool, and rents are now rising at a similar rate to house prices. And just like house prices, the bulk of the growth is coming in Northern England. But the recovery in stock levels looks to have peaked, keeping rental growth positive.”
“While new purchases by landlords held up in December, early signs in January suggest the new 5% stamp duty surcharge is starting to bite, which could fuel more rental growth in the coming months.”
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