SpareRoom.co.uk last week published research showing that nearly half of UK renters cannot afford to save for a deposit. The results of its poll show 42% of respondents say they cannot afford a deposit while 19% say they never envisage getting on the property ladder.
Among the 35% who have started to save for a deposit, almost half have less than £5,000. The average amount saved is £12,125 – just 7.3% of the average UK house price of £165,738.
The director of SpareRoom Matt Hutchinson says: “What is clear is that something has to change. House prices need to fall, mortgage lenders need to offer more assistance to first-time buyers with higher loan to value mortgages and the Government has to accept there is a need for more affordable housing to purchase and affordable rental properties available privately or through housing associations.”
One in five UK renters spent two-thirds of their take-home pay on rent. Graduates additionally find their efforts to save for a deposit hampered by student loan repayments as 48% still have outstanding university debts of more than £10,000.
Meanwhile, LSL Property Services published its latest buy-to-let index which showed that UK rents neared record high levels in June, displaying a pace of annual inflation that now matches UK CPI at 2.4%. Month-on-month rents rose by 0.9% to £718 per month in June. A record high of £720 per month was last reported in October 2011.
But as a result of the monthly rise, the pace of annual rental inflation also increased, climbing to 2.4%. LSL Property Services’ commercial director of comments David Brown says: “The sheer weight of tenant demand continues to push up rents across the country. Lending criteria remains tight and the number of mortgages given to first-time buyers – especially those without substantial deposits – is still a long way from the level seen before the credit crunch.”
“With higher rents and the growing cost of living eroding how much tenants can save towards the large deposits required to buy, it’s no surprise to see the private rented sector swelling by 262,000 households a year.”