Renters are paying more than double what home owners pay in mortgage interest, underlying the need for more rental stock, Savills claims.
Using a range of data from UK Finance and the ONS, the agent has worked out that in the year to June, renters paid more than £54bn in rent to private landlords, compared with £26.5bn in mortgage interest payments for home owners.
The total private rental bill in Great Britain has risen by £14bn over the past five years, up 35%, while the number of homes in the rental market has increased by just 21%.
In comparison, the amount of mortgage interest owed has fallen by £6.4bn, largely due to low interest rates, the agent said.
Of course, some of the increase will be due to there being more people renting, rather than purely the amount paid going up.
For example, private renters in England made up 19% of housing tenure in 2015, increasing to 19.9% in 2016, while the proportion of owner-occupiers fell from 63.6% to 62.9%.
Similarly, in Scotland, the proportion of rental households increased from 14% to 15% between 2015 and 2016, while the percentage of those owning a property has remained flat.
Lucian Cook, head of residential research at Savills, said: “It is widely accepted that the solution to the affordability crisis in home ownership is to build many more homes.
“The same is true in the private rented sector. Savills’ analysis for the British Property Federation shows that there are now almost 100,000 build to rent homes under construction or in planning across the UK, up from 48,000 last year.
“This is real progress, but we need policy that encourages the rapid expansion of build-to-rent.”
It’s not like for like. A large proportion of rent goes into maintenance – adding about a third on average to the figure, I believe. This isn’t accounted for when rent is simply compared to mortgage interest.
What it does show though, is how affordable it is to buy and how this part of the housing market certainly isn’t ‘broken.’ As Kate Faulkner has said countless times, the constant propaganda persuading young people that they cannot afford to buy must stop – as often they can, once they have saved a deposit (and house prices and therefore deposit requirements) are low in many parts of the country.
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Once they have saved a deposit. Yep that is the killer.
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“It’s not like for like.”
Nail:head.
Those that take out a mortgage have the deeds to their home at the end of it.
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…… and pay all the insurance and maintenance costs. Nor trashed properties, void periods, rent arrears, or legal fees.
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Mark you have hit the nail. Those entering onto or wanting to enter onto the housing ladder must be educated at school, by parents, by university, by employers, and encouraged to save, not spend , for that deposit.Less going out/drinking/eating etc. I know I’m an old fart saying that but experience does count!
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That’s all well and good but many, myself included, find that a bitter (some might say hypocritical) pill to swallow considering that my wife and I will have to spend 7.6 times our annual earnings on average for a home, where as you (assuming you got a house in the early 2000) only had to spend around 3.6 times your earnings for the same property. Consequentially your deposit would’ve been considerably less, and the financial criteria to meet much less strict. So it seems you were allowed to party the night away at 20-30, but I have been left with an over inflated housing market were I must save religiously (at detriment to the further economy I might add) so I can buy a home to live in. Experience indeed.
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And suffer interest several times less.
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