The Hamptons Letting Index for May showed that first-time renters made up 4.6 per cent of new tenancies for the first five months of the year, equating to 43,280 rented households in England.
This compares to first-time renters making up a 6.1 per cent share of new tenancies during the first five months of 2015, which accounted for 71,860 homes at the time. Hamptons said the share of tenants leaving the family home had been steadily dropping since this year.
Hamptons said if people moved out of the family home to rental accommodation at the same rate they did in 2015, there would be an additional 104,550 households looking to rent between 2016 and 2023.
Aneisha Beveridge, head of research at Hamptons, said: “Around 105,000 missing renters are relying on the hotel of Mum and Dad. The number of first-time renters has been steadily falling since 2015, pushed down by the spiralling cost of living and record-breaking rental growth which has stretched affordability to the edge of its limits.
“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.”
Southerners staying home
People from the south of England are more likely to stay home, as new renters made up 3.7 per cent of new tenancies across London, the South East and the South West.
Meanwhile, in the northern regions, 5.4 per cent of first-time renters made up new tenancies.
Hamptons also suggested that people were staying at home for longer to build up their savings and afford a larger home. Some 32 per cent of new renters rented a studio or one-bed this year, down from 37 per cent last year.
At the same time, the share of first-time renters opting for properties with at least two bedrooms rose from 63 per cent in 2022 to 68 per cent this year.
Rents going up
In April, the average rent outside of London surpassed £1,000 for the first time and so far this year, renters have paid £1,024 on rent each month. Hamptons said those living rent-free with their parents would save £12,290 a year by doing so.
Compared to 2022 when the average monthly rent was £925, this is an additional cost of £1,190 each year for renters.
The overall rate of rental growth slowed down in May with a 9.1 per cent annual rise, compared to an 11.1 per cent growth in April.
Rental growth was recorded in every region except for the South West.
London saw the biggest slowdown in rental growth at 13.3 per cent year-on-year, down from a record 17.2 per cent in April.
In Scotland, rents rose by 11.6 per cent annually. It was the only other region except for London to see double digit rental growth.
Beveridge added: “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. Average rents across Great Britain have risen 47 per cent over the last decade, underperforming house price growth of 6 per cent over the same period.
“However, the key issue, is that over half of that rental growth has occurred within the last four years. And this has come at a time when household incomes are under pressure from other rising costs. That said, many landlords are also facing similar pressures, and this is one of the key factors underpinning rental growth this year.”
