Rental market given boost by new millenial railcard

Rental market given boost by new millenial railcard

Following the announcement of a new ‘Millennial Railcard’ in yesterday's budget, TheHouseShop.com, have crunched the numbers to assess the impact this could have on rental markets both inside and outside of the capital.

Currently, the high cost of travel is deterring young people from moving outside London to areas like Maidstone and Reading where rents are significantly cheaper. With many young people struggling with affordability, the prospect of a dramatic decrease in monthly rent payments is hugely attractive. But with a monthly railcard from Reading to London currently costing a whopping £413.60, the money saved on rent is effectively wiped out.

Assuming that the new Millennial Railcard will work in a similar way to the existing 18-25 young persons’ railcard – 26-30 year old Millennials could expect a discount of up to one third on their commute. This could have a significant impact on re-balancing the trade off between lower rents and higher travel costs in favour of suburban commuter hot-spots on the outskirts of London.

The table below shows the average monthly rent per person for a 2 bed home and the monthly cost of travel for a number of locations varying from Zone 2, right in the centre of London, to as far away as Maidstone. It is clear to see that with current travel costs, the financial saving from moving further out to find cheaper rents is almost entirely wasted by the disproportionately higher cost of travel. When the new discount is applied, however, the savings shift in favour of these potential new commuter hot spots.


Nick Marr, co-founder of TheHouseShop.com, comments: “Many young people working in London today are struggling to afford the high cost of living, as their wages fail to keep up with ever increasing rents. Our recent research found that 1 in 4 private renters currently spend more than half their monthly income on rent – leaving little disposable income at the end of each month.

As you move further outside the capital, rental prices begin to decline significantly and tenants can end up paying almost half as much as they would for a central London postcode. However, when you take into account the cost of travel, this saving is almost wiped out – making the argument to move further afield for cheaper rents totally redundant.”

The launch of the new Millennial Railcard could offer discounts of up to a third on travel, which would have a significant impact on overall costs for young people in search of more affordable cost of living outside the capital. An unintended positive impact of the new railcard could be a boost to rental markets in outer areas like Maidstone, Reading and Winchester, as the savings balance shifts in their favour.

The chancellor has had to balance the demands of landlords, who are typically Conservative voters, with the needs of young people priced out of the market. While he may not be able to do anything to lower rental prices for Millennials, policies like this can have a real impact on cost of living for thousands of young people across the country.”

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Tony Gimple
Tony Gimple 09 Dec 2017

Linking professionalism to limited company borrowing is a flawed concept. Despite S24 etc., limited companies are the most tax inefficient way of running a property business and leave borrowers seriously...

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Evelyn Attwood
Evelyn Attwood 01 Dec 2017

It's normal. If you plan to buy a house in one of the most beautiful spots in the country you should pay a high price.

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Evelyn Attwood
Evelyn Attwood 01 Dec 2017

I think that the situation will be the same at December.

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Scott Garnet
Scott Garnet 06 Nov 2017

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richardrawlings
richardrawlings 01 Nov 2017

What has not been mentioned here is the effect of not only higher interest payments, but also that these payments are less likely to be offsettable as a business cost due to the scaling back of mortgage...

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Kelvin Lloyd
Kelvin Lloyd 09 Oct 2017

IT is up, to the Planners. If they will only give permission for bungalows on certain (suitable) sites, they will be built.

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maggie swift
maggie swift 09 Oct 2017

It's just the beginning of the shocking rise.

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maggie swift
maggie swift 09 Oct 2017

I have recently read that the bungalows can provide social housing for elderly residents in London.

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zoe glover
zoe glover 05 Oct 2017

Update! Worst company I have ever dealt with. Undervalued a Cambridge property by over 100k, wont take on any evidence of valuation including a RICS valuation done 3 years ago for the very same value...

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Paul Edwards
Paul Edwards 27 Sep 2017

Its nonsense articles such as this that make it harder to get clients to realise just how difficult the market is out there. When you see Rightmove and there are more 'price reduced' then 'new' most days...

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Tom Allen
Tom Allen 20 Sep 2017

Absolutely agree with you!

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RyanGeo
RyanGeo 18 Sep 2017

A sharp correction would be a less dramatic expression to use. That is already underway in certain sectors in Reading where I practice as Chartered Surveyor

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