Young people under the age of 25 working full-time for minimum wage are unable to afford privately rented accommodation anywhere in England, new analysis has revealed.
The analysis by End Youth Homelessness (EYH) and Yorkshire Building Society reveals that young people aged 21-24 working full-time and earning £8.20 an hour spend an average of 71% of their wage on rent – over double the 35% that is considered affordable.
The pair’s Affordability Index compared young people’s earnings with the average cost of private rented accommodation in regions across England.
The research reveals how young people are effectively priced out of the private rented sector in England, with some under-25s paying up to 251% of their income on housing.
Nick Connolly, managing director of EYH, said: “Our Affordability Index research makes evident that young people’s earnings are often too low for average housing across the country, let alone pay a deposit or cover the costs of establishing a home.
“This new data lays bare the urgency of the housing dilemma faced by many young people across the country. The prohibitive costs associated with private renting are forcing the most vulnerable young people into desperate situations and COVID-19 has pushed even more young people closer to homelessness.”
The analysis, conducted by Yorkshire Building Society on behalf of EYH, used several factors to determine housing affordability including minimum wage, Universal Credit rates, and average rental costs.
It found that Liverpool and Hull are the most affordable places in England for young people, with the average private rental property costing 38% of the salary of a 21- to 24-year-old earning minimum wage.
Unsurprisingly, the least affordable areas in England are concentrated around London, with Central London rents averaging at 251% of such a salary.
Affordability was found to get progressively worse for younger people on lower minimum wages, with 18- to 20-year-olds earning £6.45 an hour spending an average of 91% of their wage on rent. For under-18s earning £4.55 an hour this average jumps to 129%.
The data also found that young people are potentially being discouraged from working and living independently, as some young people in full-time work were found to be financially worse-off than they would be on Universal Credit once all housing costs are considered.
Mike Regnier, chief executive of Yorkshire Building Society, said: “Our new research findings with EYH are stark. There is not a single town in England where young people on minimum wage can rent affordably.
“With the average rental costing them 71% of their salary and in some areas up to 251%, many young people are priced out of the private rented sector altogether.”
A government spokesperson said: “We are providing targeted support for people on the lowest incomes – including young people – by raising the living wage, spending hundreds of billions to safeguard jobs, and boosting welfare support by billions.
“To help prevent people getting into financial hardship, we have increased the local housing allowance rate to the 30th percentile of local market rents in each area. This will remain in place until at least the end of March 2021, and claimants will gain on average an additional £600 this year in increased housing support.
“We’ve also changed the law to put in place six-month notice periods and banning the enforcement of evictions except in the most serious cases.”