Almost one in seven private renters are spending more than half of their total income on rent, in stark contrast to just two per cent of homeowners on their mortgage.
The figures, from research by the Local Government Association, suggest that renters face not just in finding an affordable home to live in, but in saving up a deposit for a home of their own with the average deposit now costing 71 per cent of a first time buyer’s annual income.
The LGA says the government should enable the building of a new wave of rented homes that reflect what families can actually afford – no more than a third of total household incomes.
The research also suggests:
- 43 per cent of private renters spend more than 30 per cent of their income on rent, the same percentage as those renting from a Housing Association;
- 37 per cent of those renting from a local authority are also spending the same proportion on rent;
- Private rents currently average at £852 across the country, with rents defined as affordable set up to 80 per cent of market rates, at an average of £545 per household.
While affordable and social rents are lower on average than private rents, the high number of social tenants spending more than 30 per cent of their income on rent reflects low total household incomes, the LGA says.
High house prices and rents are making it more difficult for young people to save a deposit to buy their first home. Previous LGA research claims under 25s today are now half as likely to be homeowners than 20 years ago.
Deposits in the South East are 85 per cent of the average household income, whilst in the North West they are an average of 55 per cent. In London, predictably, deposits fetch the highest price, at 133 per cent of a household’s average yearly income.
The LGA says councils need to be given the powers and access to funding to resume their historic role as a major builder of affordable homes, including those for social and affordable rents. This means being able to borrow to invest in housing and to keep 100 per cent of the receipts from any homes they sell to replace them.