The average UK income hasn’t been rising at the same rate as the cost of rent for tenants that want to buy their first property, and the gap between those two figures has reached its highest point so far since the recession.
New day = new data. The Office of National Statistics and the Council for Mortgage Lenders recently released analysis that shows the average income a first-time buyer would need to support a mortgage is £38,977 – but that’s an eye-watering £11,332 more than the average UK salary. In 2011 the gap was only £7,505. If you work and hope to live in London, the situation is even worse; the gap more than doubles to £23,142. In February of this year, the number of private tenants in London overtook the number of homeowners for the first time in over a decade.
This beckons two questions – will that gap keep growing? And how will be people ever be able to afford to buy their first property? All of the data here is further evidence of the reduced access to the housing market and strong suggestion that rental market will keep booming.
Traditionally, renting has been considered a ‘waste of money’, but stricter lending criteria and high interest rates can price people out of the buyer’s market. We’ve already reported how data often ignores the fact that many people don’t ever intend to buy a property and that they make a conscious choice to rent. Particularly for those who tend to travel with their work, or work on contracts or secondments, renting a property may be far more convenient than buying.
On top of all this, the social rented sector has shrunk, forcing even more households into private renting. However you choose to look at the reasons for renting, ‘Generation Rent’ is a reality. The demand is definitely there, but the upcoming changes to stamp duty for buy-to-let landlords could see the supply waiver. More good quality rental accommodation is needed now – not just in five years’ time. But where will it come from?
The Guardian published the responses of a freedom of information request which revealed 22,000 homes in London have been empty for more than 6 months – and a third for more than two years. Despite the shock factor, there’s little that can be done with the empty houses to help the private rental sector unless the owners chose to rent them out. If we look at the commercial sector, the Policy Exchange found that there are more than 500 hectares of empty or barely used industrial land across London which could be space for up to 420,000 additional homes by 2036. A positive potential – but it would require a commitment of £3.1 billion a year from the Government to finance.
Are you a tenant wanting to get on the property ladder but can’t afford to? Or are you a happy renter struggling to find affordable quality accommodation? We want to hear from you. Tweet us @Legal4Landlords and share your views.