A decline in the number of young adults leaving their family homes to rent has resulted in an estimated 105,000 “missing renters” in England, according to the Hamptons Monthly Lettings Index – May 2023.
During the first five months of 2023, first-time renters accounted for only 4.6% of new tenancies in Great Britain. This downturn in new rentals, attributed largely to soaring rents and increased living costs, has seen the average cost of rent surpass £1,000 per month for the first time.
Living at home is a significantly more economical choice for many young people, with the average would-be tenant able to save £12,290 by living rent-free with their parents this year. This will collectively save the 105,000 missing renters in England approximately £1.3 billion in rent in 2023.
While rental growth across Great Britain slowed in May, with the average rent for newly let homes rising by 9.1% year-on-year, down from 11.1% in April, affordability remains a pressing issue.
Historically, first-time renters have been a key segment of the market. Back in 2015, they constituted 6.1% of all tenants moving into a new home, equating to 71,860 new rented households in England. However, by 2023, this percentage had fallen to just 4.6%, or around 43,280 new rented households.
With the increasing cost of rent, more young adults are choosing to delay their departure from their family home. In the South of England, they are less likely to become new renters than those in the North.
On a more positive note, London has seen an uptick in the number of renters leaving the family home, even amidst double-digit rental growth. This reversal to pre-Covid levels suggests more young adults who moved back in with family during the pandemic are now relocating closer to their workplaces.
Despite the rent rise, affordability for young renters has improved slightly. Data from the ONS shows that the average pre-tax income of an 18-24-year-old in the UK has risen by 42% since 2015 to an average of £18,900, while the average rent on a single room has increased by 26% over the same period.
According to Aneisha Beveridge, head of research at Hamptons: “Around 105k missing renters are relying on the hotel of Mum and Dad.
“Young adults are staying at home for longer in order to save up, with some skipping the rental market entirely and going on to purchase a home instead.
“The good news for tenants is that rental growth is starting to cool, and we expect that to continue throughout the remainder of the year.”
