Millennials will spend £1.1MILLION on rent over their lifetimes if they don't get onto the property ladder as average rents hit £1,196

  • There is an emerging generation of lifetime renters, according to new research
  • These tenants will spend £1.1million on rent if they live outside of London
  • They can expect to spend £2.6million on lifetime rent if they live in the capital

Millennials will spend more than £1million on rent during their lifetime if they don't manage to get onto the property ladder, a new study suggests.

Millennials who began renting at 21-years-old and live in an average-sized property outside of London will spend an average of £110,830 in household rent before buying their first home - typically at an age of 32, according to research by peer-to-peer lending platform Landbay. 

For those living in the capital - where property prices and rents are significantly higher - the amount increases to £273,210.

Rents have growth have risen in most parts of the country, except for London

Rents have growth have risen in most parts of the country, except for London

However, 41 per cent of millennials don't expect to ever a home of their own, relying on renting to support them into old age. For this emerging generation of lifetime renters, the total amount they will spend on rent in their lifetime is forecast to be £1.1million on average for those living outside of London.

For those living in the capital, they will spend 2.5 times that amount at £2.6million on average.

GROWTH IN RENTS ACROSS BRITAIN (YEAR TO DATE)
Country Region Growth YTD 2017 Average rent Nov 2017
England East England 1.57 £906.53
England East Midlands 2.13 £622.59
England London -0.83 £1,870.94
England North East 0.65 £553.00
England North West 1.14 £618.24
England South East 0.60 £1,049.08
England South West 1.63 £746.18
England West Midlands 1.52 £682.80
England Yorkshire and Humberside 1.32 £575.31
Northern Ireland Northern Ireland 0.83 £563.57
Scotland Scotland 1.50 £731.61
Wales Wales 1.49 £644.05
Source: Landbay

Millennials who are able to buy their first house at the age of 32 will spend 34 per cent of their £330,234 household post-tax income on rent until that point. This equates to £110,830.

Those renting for life and retiring at the future state pension age of 68 will have to save for 15 years of rental payments in retirement, based on average life expectancies.

It means they will have to spend a greater proportion - some 44 per cent - of their household disposable income of £2.4million on rent by the time they reach the average life expectancy of 82. This equates to £1.1million in rent.

This three-bedroom semi-detached house in Leicester is available to rent for £650 a month via lettings agents Spencers

This three-bedroom semi-detached house in Leicester is available to rent for £650 a month via lettings agents Spencers

John Goodall, chief executive of Landbay, said: 'While younger people have always been overrepresented in the private rented sector, over the last decade there has been a marked increase in the proportion of younger households relying on the buy-to-let market.

'The Government is giving off strong signals that it is ready to tackle the supply shortages gripping the nation, while also improving standards, affordability and the institutional supply of rental properties in particular. This can only be good news if it becomes a reality, but with so many of the issues being systemic, only time will tell if these measures will have the desired effect.'

The Government plans to review whether landlords should be offered incentives to give tenants the option to lock into tenancy agreements for more than 12 months.

Industry insiders have suggested this could take the form of tax incentives following the tax clampdown on the buy-to-let sector in recent years.

This two-bedroom terrace house in Peterborough is available to rent for £525 a month via lettings agents Oak County

This two-bedroom terrace house in Peterborough is available to rent for £525 a month via lettings agents Oak County

THE TOP 10 RENTAL PRICE CHANGES IN 2017 (YEAR TO DATE)
Region Geography YTD % Change
Scotland Edinburgh City 4.71%
Scotland Clackmannanshire 4.33%
East Midlands Leicester 3.40%
Wales Isle of Anglesey 3.32%
Scotland East Lothian 3.30%
Scotland Stirling 3.09%
South West Bristol                                                                        2.69%
Scotland Glasgow City 2.66%
East Midlands Northamptonshire 2.55%
East England Peterborough 2.45%
Source: Landbay  

The Landbay research also examined average rents, with levels shrinking for the first time in more than half a decade in 2017.

Average rents fell 0.01 per cent in November as a two-speed market emerged between London and much of the rest of the country.

The average rent in Britain currently stands at a record of £1,196 a month, up marginally from £1,190 at the start of the year.

Outside of London, average values have risen to £759, up from £750 at the start of the year.

The slowdown in rental growth has not been consistent across the country, with the East Midlands, the South West and the East of England seeing growth of 2.13 per cent, 1.63 per cent and 1.57 per cent respectively.

London has seen the greatest reversal of rental growth, with rents falling in 26 of the 33 London boroughs.

However, London rents on average are still 2.5 times greater than those across the rest of the country at £1,871 compared to £759.

Mr Goodall added: 'Landlords have faced up to challenge after challenge over the past two years, from stricter regulation, reductions to tax relief, and a significant stamp duty tax hike when buying a buy to let property. 

'One would expect this pressure to push up rents, but two key factors have allowed them to shoulder these rapidly rising costs: the Bank of England's enduring Term Funding Scheme (TFS), which has injected a significant sum of cheap capital into banks, together with record low interest rates, which have also kept borrowing costs low.

'With interest rates now rising, and the TFS coming to an end in February, we expect upward rental pressure to be just around the corner. Without a radical house building plan for purchase as well as purpose-built rental properties, rental prices are in danger of soaring over the coming decades.'

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