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First Time Buyers Spend £50k on Rent Before Buying a House
This article is an external press release originally published on the Landlord News website, which has now been migrated to the Just Landlords blog.
The average first time buyer purchasing a home this year will have already spent £52,900 on rent by the time they get onto the property ladder, according to the Cost of Renting report from the Association of Residential Letting Agents (ARLA).
The report, compiled with the Centre for Economics and Business Research (Cebr), reveals that the average first time buyer in England in 2016 will have spent 16.4% of their total lifetime earnings on rent for all the years they were a private tenant. It is expected that future first time buyers will spend 22% more than those buying today.
First Time Buyers Spend £50k on Rent Before Buying a House
First time buyers purchasing this year in the North East will have spent £31,000 on rent – the lowest in England. Contrastingly, those in London will have spent double that, at £68,300.
The South East is the only region other than London where the total spent on rent is above the average, at £55,900.
In 2015 alone, the average tenant in the UK spent 22% of their wages on rent, rising to 30% in the capital. Those in the East of England enjoyed the most affordable rents, due to relatively high earnings in the region. However, rent still ate up 18.9% of their disposable income.
Britons that move out of their family home at the age of 18 will typically rent for 13 years before they buy their own property.
ARLA’s Cost of Renting report revealed that those leaving home and starting to rent this year will spend an average of £64,400 on housing before they can buy their first home – one fifth (22%) higher than the current first time buyer.
Those leaving home and renting privately in London will continue to be worse off, spending an average of £91,500 on rent before they buy a property – £23,100 more than those buying in the capital this year.
The Managing Director of ARLA, David Cox, comments on the findings: “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 homeownership will remain out of reach for many.”
He continues: “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.”1
1 https://www.landlordtoday.co.uk/breaking-news/2016/2/lifetime-cost-of-rent-exceeds-50-000
