The financial pain faced by many tenants shows no signs of abating with research suggesting they could end up spending an eye-watering £150,000 on rent before stepping on the property ladder.
The alarming new figures are based on the typical age of a first-time buyer being 37 years old, and an average tenant in England expecting to rent for around 18 years before they buy.
This assumes they first started renting in their late teens or early twenties, although increasing numbers are remaining living with parents for longer.
Cost of renting: The amount that tenants can potentially spend on rent over 18 years is around £150,000, Goodlord has suggested
The calculation from letting platform Goodlord used its own rental values, which stand at a monthly £699 per person on average during the past 12 months, and £1,167 per person for those living in London.
This potentially leads to a shocking £151,009 being spent on rent during their 18 years as a tenant.
And for those living in London, this figure would increase to a staggering £252,042 being spent on rent before stepping onto the property ladder.
It is based on today’s rental prices and those who have been renting for several years may have previously paid less.
However, it does provide a good indication of how much young people starting out today could pay over their time renting – before any future increases are included.
Mark Harris, of mortgage broker SPF Private Clients, said: ‘Is it any wonder that the vast majority of first-time buyers are having to call upon the Bank of Mum and Dad in order to raise a deposit or help with the mortgage given how much rent they have to pay as tenants?
“Expensive rents, combined with the higher cost of living, are making it incredibly difficult to save up in order to get on the ladder, leading to an increase in the average age of a first-time buyer. The problem is exacerbated further in areas with higher housing costs, such as London and the South East.
‘Many are resigning themselves to having to rent for longer, if not indefinitely. But while renting offers a level of flexibility, there is precious little certainty and many still aspire to be homeowners, particularly if they wish to start a family.
“The increased supply of affordable housing options, both to rent and buy, should be a priority for the Government.’
| Monthly rental average, per property | Monthly rental average, per person | Per year | Over 18 years | Lifetime | |
|---|---|---|---|---|---|
| East Midlands | £993 | 584.02 | 7,008.29 | 126,149.25 | 427,505.80 |
| Greater London | £1,984 | 1,166.86 | 14,002.35 | 252,042.28 | 854,143.28 |
| North East | £879 | 516.86 | 6,202.31 | 111,641.60 | 378,340.98 |
| North West | £980 | 576.57 | 6,918.80 | 124,538.46 | 422,047.02 |
| South East | £1,291 | 759.19 | 9,110.32 | 163,985.78 | 555,729.59 |
| South West | £1,242 | 730.32 | 8,763.78 | 157,748.11 | 534,590.83 |
| West Midlands | £952 | 559.99 | 6,719.90 | 120,958.16 | 409,913.76 |
| England | £1,188 | 699.12 | 8,389.39 | 151,009.09 | 511,753.04 |
The Goodlord research also suggests that the money being spent on rent could almost triple for those tenants who don’t ever manage to get onto the property ladder.
It suggested a lifetime of renting based on the current British life expectancy of 80 years could potentially cost tenants £511,753.
For Londoners, this figure could increase to what seems like a virtually impossible cost of £854,143, based on a similar calculation.
On this basis, it would seem reasonable that tenants could more than easily pay off their mortgage if they were able to secure a home loan at the beginning of their property journey instead of renting.
Total cost: A lifetime of renting based on the current British life expectancy of 80 years could potentially cost tenants £511,753, according to Goodlord
Zoopla revealed the average first-time buyer deposits that are paid across the country (figures are from last year)
Many buyers are unable to buy so early in life due to the high price of property in relation to their earnings and the struggle to sufficiently save for a deposit.
The average deposit paid by a first-time buyer last year for a three-bedroom home was £34,500 for a £240,000 home.
It amounts to a 15 per cent deposit for the property, according to separate figures from Zoopla that were published last year.
In London, the average first home costs £425,000 with the average deposit of £144,500.
It is in contrast to the North East, where first-time buyers pay the smallest deposit on average of £26,400 on a £110,000 property.
Tenants have faced an acute rise in rents over recent years, which is making it increasingly difficult to save for a deposit to buy
The North East is also where the lowest rents can be found, with tenants typically spending £517 a month, which leads to £11,642 over 18 years.
It is less than half of the costs facing Londoners, according to the Goodlord data.
Oli Sherlock, of Goodlord, said: ‘Tenants have faced an acute rise in rents over recent years, which is making it increasingly difficult to save for a deposit to buy.
‘Ironically, this is compounding the issue of high costs as the number of tenants continue to increase, driving up demand for available rental properties.
‘At the same time, rising mortgage rates are forcing some landlords to question whether to stay in the sector, tightening supply and demand even more.
‘The Government urgently needs to commit to a new programme of house building and take steps to boost the number of rental homes to create a sustainable housing market for all.’
