Millennials spending up to 41% of their Budget on Rent

Rental trends:

Three biggest rental trends influencing 22-37 year olds revealed in a new rental market analysis by London based hybrid letting agents, Home Made.

Over the last 12 months, Home Made, analysed the spending trends on property rentals for Millennial tenants in the 22-37 age bracket.

They have discovered that Millennials in London are spending up to 41% of their net income on rent (Net share of yearly rent/ Annual salary), which compared to 32.5% of net income in 2005.

Rental prices in London are rising faster than pay levels. However, Home Made have
analysed proprietary data alongside multiple data sources to uncover the other major factors influencing this Millenial spending trend:

● 82% of Newly Built apartments’ renters in London are Millennials. This highlights
a willingness within the demographic to pay for top quality new apartments and the
associated amenities, a co-living community lifestyle, in order to live in a newly
developed environment. This trend shows a large portion of London Millennials are
willing to pay extra for quality which is a positive sign for the growing Build-to-Rent
market.

● 57% of the rental enquiries made by individuals living in outer London (zone
3-4-5-6) are for inner London properties (zone 1-2) (Share of properties is evenly
distributed by Zone 1-2 vs 3-4-5-6). This trend indicates commute time and being
close to inner-city amenities rank higher in importance for the Millennial demographic as they flock towards smaller, but more expensive rentals. The data does not, however, show that Millenials are too concerned with being as close as possible to their workplace. With an average Millennial commute time in London of 37 minutes, areas such as Hackney, Brixton, and Clapham have greatly benefitted from offering a convenient commute and local amenities.

● The Millennial thirst for flexibility is challenging the wider UK trend of longer
fixed term tenancies. Recent reports by Goodlord revealed that the average
tenancy length in the UK is now 14 months, a decrease of over 7% from 2014. Home
Made have observed a drastic increase in the number of Buy-to-Rent operators
and private landlords accepting short and medium tenancies /break clauses (6
months) in London. Aimed at Millenials looking for maximum flexibility, these
shorter-term rental options are typically offering bills included and pre-setup at a
higher price.

Asaf Navot, CEO of Home Made says this about the trends highlighted in Home
Made’s analysis:

“Millennials have very specific requirements and preferences as to how they wish to
rent, different than any other renters’ segment we have ever seen before.

“This translates to changing renting patterns, such as the willingness to pay a growing share of their income in order to belong to the right community and in the right location.

“Renting is no longer an outcome of an inability to buy a house, but a
preference to invest their time and money in the acquisition of experiences over
possessions or savings.

“Landlords who manage to address these needs, will be better positioned to serve the
growing number of renters choosing to rent, and will enjoy better returns on their
assets.”

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