'Rental Britain' here to stay
Filed under: House Prices
Worse, it expects some rents will completely wipe out the average monthly pay cheque. And it's not just younger people affected.
Need to know: Savings
One of the report's key points is that many families will consist of parents in their forties continuing to rent, despite the fact that paying a mortgage is often cheaper than renting, once a huge deposit is paid. Yet getting past that deposit hump is hugely problematic, compounded by low interest rates on savings.
"We estimate," says the report, "that Britons paid a total £48 billion in rent to private individuals and institutions in 2011 and forecast that this will rise to £70 billion within five years as rents and the amount of renting rises."
Rental growth remains strongest, as you would expect, in London. Despite house price wobbles nationally, London saw a 7.2% rise in Asking rents in the last quarter of 2011. "The average annual rent," says the report, "for such a property equates to 31% of the average local salary. In London the average rises 53% and across the South East it is 35%."
£26k depositBy contrast, in the East Midlands and the North East rent costs typically drop to 25% of salaries, albeit actual disposable income levels are lower.
The average deposit for a first time buyer in the UK currently stands at £26,000 up from £12,000 five years earlier. In London that average rises to some £58,000, with 71% of first time buyers requiring assistance from their family.
Although the government claimed it would boost house building in the Budget, Shelter chief exec Campbell Robb remains unimpressed: "If the government is serious about getting Britain building, it needs to deliver serious investment to match. This would not only help the millions of hard-pressed families who face a daily struggle to meet their housing costs, but would support Britain's economic recovery by creating jobs and growth."
If you're looking for a place to rent in London, you might find this website, backed by Shelter, useful. It supplies typical monthly rents figures and estimates of what you might need to come up with for a deposit. However, you may already be giving up on London. Shelter claims that 1.8 million (almost a third) of Londoners say they expect to be driven out of the capital by the high cost of housing.