Home ownership further out of reach as lifetime rent cost passes £50,000
Owning their own property is getting harder and harder for first time buyers, with the lifetime cost of rents set to increase by nearly £12,000 for those starting renting this year.
The research published by the Association of Residential Letting Agents (ARLA) also says that the average first time buyer moving out of the family home today will spend 16.4% of their lifetime earnings on rent.
Those buying a property for the first time this year in the North East will have spent £31,300 on rent – the lowest amount in England. Whereas in London, the average amount spent is more than double that, at £68,300. The South East is the only region other than London where the total lifetime rent spent is above the English average – where the total rent expenditure equates to £55,900.
On average, Brits striking out on their own at 18 will buy homes by 31. However with the cost of lifetime rents being 22% higher for those, we can expect this to happen later and later. 21% of those currently renting don’t think they’ll ever buy a home, blaming rising house prices and low wages. On the other hand the vast majority of 18-34 year olds (75%) believe they will eventually buy their own homes. This drops to 48% in 35-54 year olds. 61% of people renting say they are unhappily doing so.
David Cox, managing director, Association of Residential Letting Agents (ARLA), said: “The rising cost of rent in this country is a huge issue, and is preventing tenants from being able to save to buy a home. Our Cost of Renting report reveals that tenants are already spending a significant proportion of their income on rent, and therefore struggling to save any money. However, as house price affordability worsens and interest rates start rising, more pressure will be put on renting with weekly rent likely to rise, so home ownership will remain out of reach for many.
“Rents are becoming alarmingly unaffordable due to the lack of available housing; the North-South divide we’re currently seeing in the UK is a clear illustration of this. The London rental market is competitive, with far more prospective tenants looking for properties than actual houses available. This is pushing up rents in the capital, which will continue to put pressure on surrounding areas, including the South East, as Londoners relocate to avoid high rent costs.
“It’s really worrying that so many renters don’t ever expect to be able to afford a home. Although housing is high on the political agenda, all we’ve seen come out of parliament recently is legislation which is set to hinder the experiences of tenants; and the sheer lack of affordable housing means many renters will never fulfil their dreams of home ownership. Despite the Chancellor’s efforts in the Budget to help the housing market, the housing budget accounts for just 0.26 per cent of public spending, lower than other key areas, such as transport which accounts for 3.6 per cent of total spending.
“As rent costs continue to rise, unfortunately more and more tenants will find themselves renting for longer as they have less ability to save. We need to take action now, before we become a nation of forever renters.”