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Homehunters spend £41,900 on rent before becoming first time buyers

Homeowners rent for an average of seven years before buying their first home, says new report

The lifetime cost of renting for those who choose not to buy a property is likely to be more than £296,000, according to new research from Santander Mortgages.

Homeowners spend an average of £41,900 on rent in the UK before buying their first property, its latest report suggests, with homeowners who rent prior to buying spending an average of seven years as a tenant, rising to 11 years or more for 15 per cent of these homeowners.

In addition to monthly payments, most private rental tenants are also asked to put down a security deposit which Santander says now averages £657 per tenant. Only 39 per cent of those currently renting received the full deposit back, with the average amount withheld by landlords standing at £130.

The study indicates that the average homeowner changes home every three years while renting.

"Renting may appear to be the most financially viable option for some people," said Miguel Sard, Head of Santander Mortgages, "but in the majority of cases it isn’t the most cost effective. Over the years, payments made by rental tenants amount to a staggering sum, and these are not funds that you can recoup. The mortgage market is extremely competitive at present, with options available to suit most budgets."

Home loans have risen between December and January for the first time in 12 years, according to chartered surveyor e.surv, up nearly a quarter between the two months.

Richard Sexton, director of e.surv chartered surveyors, said: "January was something of an anomaly in the mortgage market. We normally witness a January slowdown in which borrowers choose to pay down Christmas debt rather than invest in property, but this year both banks and buyers have continued full steam ahead.

"Demand is strong from the top to the bottom of the market. First-time buyers are keen to lock into cheap deals and get on the ladder, especially with recent talk around a potential base-rate rise and the revision of forward guidance. And lenders are actively trying to keep volume high, to get business through the door before the Mortgage Market Review  puts a cap on the volumes they can process."