It is well documented that many young people cannot afford to buy a home in the UK but new research reveals just how many cannot also afford to rent a property.
Some 700,000 young people aged 18 to 34 cannot get onto the renting ladder, hit by a combination of rising deposits and rents, landlords not wanting young tenants and poor credit histories.
The research from credit report provider Noddle also shows that to rent a property most tenants have to save for four months for the necessary deposit and still often need to rely on guarantors to secure a home.
They are facing average rental deposits across the UK in the private rented sector of around £970 or in London £1,831, and average rental payments are £927 per month or £1,593 London some 3% higher than a year ago.
The data indicates that landlords and letting agencies are often rejecting prospective tenants because of their credit history and this is even more so in London where 16% of young people are refused a tenancy on these grounds.
Given that on average almost four people apply for each rental property, the scales are heavily tipped towards the landlord, according to Jacqueline Dewey, managing director of Noddle.
‘Our latest research suggests that it’s not just buying property that’s become increasingly difficult for young people today as renting is also out of reach for many. As demand for rentals becomes greater, especially in the big cities, landlords can pick and choose who they want in their properties,’ she pointed out.
‘Credit checks are becoming more and more important in the tenant selection process. We hope by raising this issue, we can help young people achieve their financial goals and get the property they desire,’ she added.
The advice to young people is to try to have some bills or other sources of credit on their name and not that of their parents, such as a mobile phone or a credit card as a potential landlord can’t assess your credit worthiness if you’ve never had credit.
It is also worth making sure that all financial products are ties to the same name and address and that bills have been paid on time. Missing a payment can impact on a credit score and being on the electoral roll helps provide proof of address.
Keeping credit balances low but as the same time using some credit every month while paying off the balance on time is an indication of proof for a landlords of good money management, it also suggests.