Living standards will improve in 2014
Rent rises will be overtaken by wage growth in 2014, while disposable income for those in the private rented sector is set to grow for the first whole year since the financial crisis, analysis from LSL Property Services has revealed.
Promisingly household disposable income will rise in real terms for the first year since 2009, as rents will grow by 1.7% annually while average earnings will increase by just 2.2%.
Just 1.4% of all tenancies will face rent arrears, down from 2.3% in 2013.
The historically significant cross-over of earnings growth and rent rises be will likely to take place in July, yet it could happen as soon as April if wages pick up more quickly.
David Brown, commercial director of LSL Property Services, said: “The longest recession in living memory has been banished to the history books. And this year the squeeze on living standards is finally abating too.
“Households have withstood half a decade of bombardment from weak earnings, inflation – and a general spectre of gloom. We’re still some way from the finish line, but for now things can only get better.
“The private rented sector is now powered by waves of investment from landlords and a rejuvenated financial system. Meanwhile every sector of the economy – including construction – appears to be creating jobs.”
As of January, the average earner living in privately rented accommodation has £822 per month remaining after paying tax and rent, 6% less than the peak of £874 in September 2009.
Less tenants are encountering problems with arrears, as of Q1 2014 the number of UK households owing more than two months’ rent was 35% lower than the same period last year.
Article courtesy of Mortgage Introducer