UK rental market - how does it compare with the rest of Europe?

Even though the government has tried to make life better for renters, the UK is still a long way from being a renter’s paradise. 

That said, it’s also a long way from being the worst country in the world in which to be a renter. 

It’s often said that one of the best ways to start addressing a problem is to look at how other people deal with the same issue. With that in mind, here is a quick overview of the UK rental market and how it compares with the other parts of Europe.

Home ownership rates

In 2018, approximately 63% of people in the UK owned their own home. While this is much higher than in some countries (in Germany, for example, the figure is 46%), it is substantially lower than in others (in Spain, for example, it’s currently around 78%).

What’s more, the UK’s home-ownership figures have been in steady decline since 2003, when the figure stood at a national high of 71%, although it has to be acknowledged that this peak was, at least in part, fuelled by the building boom (and local-authority-home sales) of the Margaret Thatcher era.

Rent controls

There is a certain level of rent control for social housing, but this only makes up a very small percentage of the UK’s stock of rental properties, so, in practical terms, the UK is effectively an unregulated market.

The impact of this varies throughout the country, peaking in London, where renters in the private sector can hand over more than 40% of their salary to their landlord (as can renters in Madrid, Rome and Warsaw).

Outside of London, and to a lesser extent other major cities such as Manchester, the differential between controlled ‘affordable’ rents and standard market rents can be much lower. 

This pattern holds true throughout much of Europe with the big exception being Germany, where renters in Berlin, Cologne and Frankfurt pay around 21% of their income on rent and even in Munich they only pay around 25%.

These cities all have rent controls, which have been suggested for the UK. However, it’s worth noting that while rent controls may be a factor in the lower rents, they may not be the only one.

Germany not only has much lower population density than the UK, but also has a much greater supply of high-quality housing stock, which means that tenants have a higher degree of choice.

Other protections for tenants

At the current time, the UK has relatively little in the way of tenant protections. There are deposit protection schemes and there is a certain level of protection against poor-quality housing and unexpected or unfair evictions. 

However, on the whole, the UK is still very much a seller’s market with tenants having to convince landlords to accept them rather than vice versa. 

Landlords here are still able to evict tenants relatively easily compared to other countries, notably Germany and France, where landlords of unfurnished properties must offer three-year minimum tenancies, which are automatically renewable and must give tenants at least six months’ notice if they want them to leave.

*Mark Burns is the Managing Director of Indlu Estate Agents in Denton