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A critical benchmark for the lettings sector - the cross-over of average earnings growth and rent rises - may take place this month according to LSL Property Services.

Over the course of 2013 average earnings increased by 1.1 per cent while rents rose 1.6 per cent on the same seasonally-adjusted basis. Previously rents had outpaced wages more than twice over - for example, in 2012 rents rose by 3.2 per cent over the course of a year while average regular earnings grew by just 1.3 per cent in the same period.

By contrast, 2014 is set for rent rises of 1.7 per cent over the course of 12 months and average earnings growth of 2.2 per cent over the same period. LSL calculates the cross-over could take place this month or possibly in July.

The last time rents rose more slowly than earnings on the same 12 month seasonally adjusted basis was in April 2010, meaning this expected crossover will be the first time regular earnings have outpaced rent rises in at least four years.

With one individual earner per household, the typical monthly rent represents 38.2 per cent of regular earnings in LSL's latest figures for January 2014. This measure is expected to peak at 38.3 per cent in figures for March before what the company predicts will be a sustained fall until at least 2016.

Comments

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    With one individual earner per household, the typical monthly rent represents 38.2 per cent of regular earnings in LSLs latest figures for January 2014. This measure is expected to peak at 38.3 per cent in figures for March


    Is that gross or net earnings the difference is massive in terms of affordability.

    Doubtless it is gross as most referencing companies allow between 35% and 40% of gross earnings to cover rent.

    • 10 April 2014 08:01 AM
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