Families caught in ‘rent trap’ as costs continue to rise
A “rent trap” is preventing British families from owning their own homes as rents rise by almost £300 annually across England, according to a new report from housing charity Shelter.
Private rents have increased by thousands of pounds in some areas year-on-year, leaving renters with no money to save towards buying their own home. Rents rose by 2.8 per cent across England between 2011 and 2012 while wages remained static.
The charity’s report argued that the private rental sector is “no longer fit for purpose” and has outgrown its role in providing accommodation for students and young professionals.
Monthly average rent in England rose to £793 last year with Surrey Heath and Elmbridge in the South East named as the areas with the fastest-rising increases, they had average annual rises of £1,756 and £2,178 respectively. Annual rents have risen by more than £500 in one in seven local authorities.
The South East and London dominated the list of areas with the fastest-rising rents as would-be home buyers have stay trapped in the rental sector by high rent. Many cannot meet lenders’ toughened borrowing criteria or raise the typical 20 per cent deposit. The areas hardest hit by rapidly rising rents include: Surrey Heath, Elmbridge, Merton, Rutland and Wandsworth.
My husband and I work incredibly hard but it feels like we will never have the stable family home we want so much.
Abi Reilly, teacher
A Government scheme introduced last August to boost lending by giving lenders access to cheap finance has contributed to an uplift in mortgage lending to first-time buyers. The latest Bank of England figures show mortgage approvals for house purchase reached their highest number in almost a year in December.
However, the financial pressure caused by rental increases is leaving tenants without the cash to save for a deposit. More than half of renters surveyed have £100 or less left over cash month after covering rent and bills.
Almost six in 10 tenants said that they are unable to put any cash aside as savings – leaving them with no hope of raising their deposit. As more tenants continue to rent increased demand is placed on the sector, keeping rents high.
Teacher and mother-of-one Abi Reilly, who rents a home with her husband in Reading, has said it seems “impossible” to save enough for a deposit.
“My husband and I work incredibly hard but it feels like we will never have the stable family home we want so much.”
Chief executive of Shelter, Campbell Robb, has called on the Government to do more to dismantle the “rent trap”.
“This report reveals the huge scale of the rent trap holding back young people and families up and down the country.
“Rising rents are leaving people with little or nothing to save at the end of each month, giving them little chance of ever saving enough to climb on to the property ladder.”
Housing Minister Mark Prisk has claimed figures from the Valuation Office Agency show that median rents were unchanged nationally over the past year and highlighted a study by Rightmove forecasting that two-thirds of landlords plan to freeze rents in 2013.
“For those looking to rent, we’re expanding the numbers of homes available, with a £200 million Build to Rent fund and £10 billion in loan guarantees to encourage more investors into the sector.”