Analysis - fewer millennial tenants help drive down rents

Tenants are now paying less rent than five years ago, research claims.

Analysis by Hamptons claims the total amount of rent paid by tenants across Great Britain has fallen 8 per cent from a peak of £62.4 billion in 2018 down to £57.3 billion in 2021. 

This fall takes the amount of rent paid by tenants back below 2015 levels. 

The agency’s August Lettings Index says the drop has been driven by a combination of fewer millennials renting and successive generations spending different amounts on rent.

Rents for millennials - those born between 1980-1996 – have dropped 28 per cent from a peak of £33.3 billion in 2017 down to £24.0 billion this year. 

In contrast, Generation Z - those born between 1997-2012 – have seen their total rent bill double from £1.8 billion to £3.6 billion between 2020 and 2021.

Older renters in Generation X, born between 1965-1980, tend to have high rents as they live in more expensive properties and are now unlikely to buy, Hamptons said.

This cohort's rental bill has grown 102 per cent to £3.6 billion over the past year, according to the research.

Overall, Hamptons said the average rent of a new let in Great Britain rose 7.4% annually or by £75 in August to stand at £1,085 per month.

Aneisha Beveridge, head of research at Hamptons, said: “Leaving home in the middle of a financial crisis, like most Millennials did over a decade ago, made buying a home difficult. 

“Collectively, Millennials are likely to have paid more in rent than any other generation. 

“But as the oldest Millennials turn 40, their rental bill is now dropping sharply as they become less likely to be a tenant and more likely to own their home. 

“With fewer Millennials renting, the overall amount of rent being paid is falling too

“But Generation Z’s bill is growing more slowly than Millennials’ ever did when they left home.”

Beveridge added that buyers in Generation Z are now benefiting from low mortgage rates and home buying support schemes that weren’t always available for older generations and could help them skip the renting stage.