Renters Pay More Than Those With Home Owner Loans
Being accepted for a home owner loan or mortgage is becoming more difficult for first time buyers, particularly due to the strict lending criteria from banks and building societies and relatively low loan to value ratios which are on offer.
Many are simply unable to afford to get onto the housing ladder, either because they can not afford the loan repayments, or they are unable to raise a large enough deposit to meet the required loan to value levels. As a result of this, many would be home owners are being forced to continue renting property instead of buying.
This in turn, is having a knock on effect on the rental market by pushing up the cost of rental property due to the increased demand from those who would otherwise be paying a home owner loan or mortgage.
A recent survey, conducted by Zoopla.co.uk has found that the average cost of renting a property is now around 10 per cent higher than it would be to buy a house at a similar level and this is the case in 40 out of the UK’s 50 largest towns and cities.
The comparison is made between the typical rent levels and the cost of an interest only home owner loan at an interest rate of 5 per cent, for a two bedroom flat in various areas across the country.
The research has found that the most expensive place to rent a property is Milton Keynes, where the average rent is 43 per cent higher than the equivalent home owner loan. this means that someone renting would pay somewhere in the region of £2,964 more every year, than someone paying for a loan.
Nicholas Leeming of zoopla.co.uk said “Almost 750,000 would be first time buyers have reluctantly ended up as renters over the past three years as a result of being unable to get a mortgage. With current house prices and interest rates where they are and with rents on the rise, for those who can get a mortgage, there may never have been a better time to buy.”
