Four in 10 renters cannot afford to save, says study
Four in 10 people living in rental accommodation cannot afford to save anything for a deposit to buy their own home, as high living costs and loan repayments are already swallowing up their cash, a study found today.
Just over one in seven people surveyed said they are having to spend more than two thirds of their take-home pay just on their rent, website SpareRoom.co.uk found.
A fifth of those questioned cannot see a time when they will be able to get on the property ladder, while a further 17% believe they will have to wait longer than a decade before they are in a position to buy.
Some 15% of renters said they are regularly dipping into their savings to make ends meet and this figure rose to 60% for people aged under 30.
Almost half (48%) of renters aged under 30 said they still owe more than £10,000 in university fees.
Rents have soared over the last year as people unable to get on the property ladder, because they cannot raise a deposit or meet tightening borrowing criteria, have stayed in the rental sector.
A recent study from LSL Property Services, which owns chains Your Move and Reeds Rains, found that strong competition among tenants has helped the average rent to rise to £712 a month on average.
It found that rents rose at their strongest annual rate in London, where at £1,038 a month they are 4.2% higher than a year ago.
SpareRoom director Matt Hutchinson said: "Soaring living costs mean it's a struggle for many households just to keep their heads above water each month, let alone have enough spare cash to put aside towards a deposit.
"The survey shows that even those who are squirreling away funds have not managed to save anywhere near enough to buy the property they want.
"What's 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."
The SpareRoom study also found that almost a third of people are spending more than half their take-home pay on rent.
Eight out of 10 tenants surveyed said they were professional workers in employment, but four in 10 said the sizeable deposit they would need was stopping them getting on the property ladder, while a fifth said house prices are still too high.
Some 35% of those surveyed were trying to save for a deposit to buy a house, but of those, four in 10 had saved less than £5,000.
The average deposit saved is £12,125, just 7.3% of the average UK house price of £165,738 and well short of the 20% often demanded by lenders.
The Bank of England expects borrowers with low deposits will have a particularly tough time getting a mortgage in the coming months, as lenders tighten their criteria amid the weak economy and borrowing becomes more expensive.
Almost a half (48%) of those surveyed said they would be happy to rent long-term if there was less "pressure" in the UK to own a home.
More than 2,000 people took part in the UK-wide study last month.
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