Many young couples are priced out
First-time house buyers who are priced out of the property market are now facing the added headache of rising rental costs in most parts of the country, according to a new survey.
Demand for rental property is at its strongest for two years, according to a research from the Royal Institution of Chartered Surveyors (RICS), and this is pushing up prices in most parts of England, Wales and Scotland.
RICS said a surplus of first-time buyers, along with growing numbers of "opportunist" homeowners who have sold up to cash in on the property boom, has fuelled the increase in rental costs, particularly in the north.
News of the increase will be welcomed by a growing band of amateur property speculators who have jumped on the fashionable buy-to-let bandwagon.
However, rental costs in London and the south east of England, which have been hit by large-scale job losses in the financial services sector, are still on a downward trend.
The capital remains by far the most expensive place in the UK to rent, with average rental costs running at £1,619 per month compared with £714 in the rest of the country.
"Fears of a house price slump have seen some households bring sales forward and rent while they wait and see what happens to prices," the survey said.
"Meanwhile, some prospective first -time buyers are renting because they cannot afford to buy.
Over the last few years, the so-called "buy-to-let boom" has seen an increasing number of private investors pile their money into bricks and mortar, but that trend may now be past its peak, according to RICS.
RICS members said new instructions to rent were lower than a year ago when the buy-to-let boom was at its peak.
RICS residential lettings spokesman Jeremy Leaf said: "Strong demand for rented homes has helped rents hold steady.
"Residential let properties are currently offering a return of about 5% to investors which, after allowing for repair and maintenance costs and periods when a property may be left empty between lettings, gives a net yield of 2% to
Surveyors anticipate a small rise in rents over the next quarter.
What is your experience? Has your rent gone up? Or are you living in the South East and enjoying cheap rents? How are buy-to-let investors coping with the rental market, particularly in the South East?
My father purchased his suburban London family home at four times his salary in the mid 1970s, when he was in his twenties. At a similar age, I am fortunate to enjoy an income that is roughly double what his was in real terms, yet that same house would cost eight times my current salary. For me, that encapsulates the problems that young people face with the housing market today.
Something really needs to be done about the state of the housing market.
I've actually found the opposite is true in Manchester. Rental prices seem to be coming down due to a surplus of flats in the area.
Dave Gort, UK
The rest of the country is just lagging behind London. Rents and house prices are falling in London after years of unsustainable 'bubble' growth. I now feel fully justified in renting and waiting to buy my first place. I could afford it now if I wanted. But why not wait and get what I want 20-30% cheaper? Booms are always followed by a bust, and the bust is already happening in London. Hoorah!
Paul, London, England
Rental prices in Oxford are now so high that for a one bedroom flat it's cheaper to get a mortgage than rent, provided you can afford a reasonable deposit. Once you get 2 bedrooms or more it's not too bad, but there's no way that I, as a recent university graduate on a reasonable salary, can afford to rent a place on my own. People are living further and further away, and commuting up to 25/30 miles into work, simply because prices in town are so excessive. It's obscene.
Phil, Oxford, UK
I hope you are pulling my leg!
I am so sick of the whole housing situation, and this really is the icing on the cake. My partner & I are renting because, that¿s right, we are priced out of the market and now this.
I've been renting since 1989, having been caught by selling (unavoidably) during the last big bust in house prices. My first rent was £450pm, for a furnished 3-bed semi. Now, 14 years on, I'm still only paying £450 a month rental, although for an unfurnished 3-bed semi. So tell me again how rent has gone up?...
Paul, Coventry, UK
First time buyers should rent for now. In 1988, faced with a similar predicament I mortgaged heavily to buy a first property. 5 years later I sold it at £20k loss. I should have rented and partied for five years.
Today¿s cost of living is a vicious circle for young people. We cannot afford to buy property whilst we live in rented accommodation. Salaries do not reflect the costs of getting on to the property ladder. It's about time the government realised this and made some serious allowances for first time buyers
My Grandfather bought a 3 bedroom semi at my age on a seaman's wage, while supporting my Grandmother. I am a single IT worker with a Masters of Engineering, earning well for my stage in my career, and I couldn't afford a decent flat.
Something has to change.
I, like many other twenty-somethings have been priced out of the market. Although my current rent seems relatively low I am in no position to save any money towards a much needed deposit for a house in the future. My parents when starting out also had to rent until being able to afford to buy- the one difference being they could rent and save at the same time. Something really needs to be done about the state of the housing market, before the already disillusioned first time buyers become further priced out and bitter.
I have two properties which I rent out in North West London and am now looking for a third. Lettings agents will tell you that the rental prices have come down but I have just rented out my second property and I had four offers in three weeks, even after 90% of lettings agents told me that it was too expensive. What I have found though is because there are so many lettings agents fighting for the business you can easily knock down their normal commission of 10% to 5% inc VAT
The government should also restrict the number of houses one person can buy.
It has just taken me five months to find a property to rent in Suffolk. The supply of rental properties is falling, whilst demand is increasing, this is now driving up rental costs.
This is particularly worrying as any single persons, regardless of status and means, could end up homeless due to lack of availability of private rented property. This issue is not being addressed by anyone from Local Authorities to Central Government.
Additionally Letting Agencies will not deal with anyone who is not in full time employment or self-employed, or wishing to share.
The private rental housing sector needs a radical rethink and legislation.
My girlfriend, myself and my 8 month old son are renting property in Brighton. We have looked to buy but can only afford a studio flat on 4 times my salary. We pay more in rent than we would do on a mortgage but no mortgage company will touch us as my partner is not working (she is doing the right thing by us and looking after our son for the first year of his life). Buy-to-let is a farce and a joke as this makes property even more attractive to private investors who stand to make substantial profits from rent. House prices rise by 10-15% per year but most peoples salaries do not enjoy the same increase. We are not interested in making money from our property, we just want somewhere we can call our home. We are seriously considering moving out of the South East, to another part of the country where there is not such a gulf between the house prices and salaries.
Even working for a firm that is in the top 25% when it comes to pay in my sector, at the age of 25 I simply cannot afford to buy my first house yet. This is in spite of having financial support from parents. The problem is that anywhere I can afford is somewhere too impractical for my job, so I am forced to rent close to the city. All I am able to do is wait and hope for the prices to become sensible again, or, failing that, leave my job and go work somewhere realistic.
It seems a bit odd why rents are rising.
Recently in Southampton I have seen a
proliferation of TO LET signs outside houses
which is probably indicative of a surplus
of rental properties and too many landlords
chasing too few tenants. Some of the houses
which displayed TO LET signs now display
FOR SALE signs which looks as if the
landlords are pulling out and the buy to let
craze is over. In such circumstances rents
should be falling.
We had a change of tenants in our house in south west London earlier this year. With it came a decrease in rent of GBP 300 per month. Such a decrease was representative of the rental market at the time, and we accepted it. It is important that landlords be realistic and not greedy holding out for more money. By looking at our letting agent's website, overpriced but attractive properties remain on the market since January, when our house was listed. It is 'money in the bank' that is important, not properties sitting empty for the sake of not being able to face up to true market value.
USA (British ex-pat)
Whilst the government restricts the number of new properties built each year, it should also restrict the number of houses one person can buy. This would help prevent first time buyers being priced of the market.
With the State of the current housing market at the moment, I think larger tax¿s need to be applied to people buying second properties to let. It needs to be made a less attractive form of investment to help increase the amount of properties available on the market. My view maybe biased as I am trying to get on the property ladder, but I cannot help feeling that buying to let is the rich getting richer by exploiting the market which effects the unfortunate soles in the same position I am.
The housing problem will only be sorted out when do the following:
Restrict some new housing to local people only.
Build more housing.
Encourage self build schemes.
Build better transport links to areas that have large numbers empty housing so that they can get work.
Until then house prices will remain silly.
I, too, purchased my first house in the London suburbs in the mid 70's at 3 1/2 times my annual salary (gross0. That same house now would cost about 7 times the annual salary that I would expect for someone with similar qualifications and experience as I had then. BUT, the mortgage rate now is about 6%. The mortgage rate then was 15%. Actual monthly repayments, as a proportion of salary were similar or often higher that they are now. House prices have always been set by what first-time buyers are prepared to afford.
Peter English, England
London at the moment has a 'renters' market: homes purposely bought to rent at high prices are not being shifted, I have found that haggling with the owner particularly worthwhile as if a property is empty, they are losing the supposed renting value, which itself is usually hugely inflated
Having only recently begun renting a property i am fully aware that especially in my area it costs nearly double the current mortgage rates to rent a two bedroom property. Those of use who are unable to get a mortgage for whatever reason are tied to renting at astronomical rates. The rental, and indeed all, house prices need to fall to enable prospective first time buyers like myself to get on the ladder, albeit at the bottom rung
Pete, Surrey, UK
Friends in Europe are amazed that we would even consider buying property in our 20s. Home-ownership is not an issue over there and no-one expects to be on the property ladder before they are 30.
In a fairly expensive part of Essex I can afford to rent a 4 bed semi, on my own, paying 6 months in advance; yet I still cannot afford to buy even a 2 bed mid-terrace!
K Rosser, UK
I've been living in the same rented house with 3 others in Finchley, north London, for over 6 years (probably should have bought back then!), but as the rent has been static at £40 a week since I moved in, I've saved more than enough for a large deposit whenever I eventually decide to buy (I'm not in any rush now, especially as prices are falling noticeably). So there are cheap options in perfectly nice areas of London if you look for them!
26 Years Old and Still no Bricks and Mortar!
I used to rent until it became to expensive. I used to pay £400-£500 a month and that¿s exclusive, mortgage lenders bombard us with advertisements although they do not clearly state the complications. I now live with parents which I find much cheaper and more secure with life ahead.
Ibsy, UK - London
If we did not have such a greedy society like we have today and have had since the early eighties. Prices would not have shot through the roof as it were. I bought my first house in Torbay Devon in the early Eighties for £24.0000 18 years later the house next door is on the market for £135.000 I myself feel for the first time buyers.
I have recently lost my house after a painful divorce settlement. I am 43 probably at the peak of my well paid career yet I have no chance of affording even a very basic 2 bed home in the South East. I am forced to rent and the older I get the less affordable a mortgage is as the period of the loan generally cannot exceed your 65th birthday.
Having lived in London and witnessed rent and sale prices increase year on year there is certainly a shift of late. Rent has most definitely come down in the last 12 months in the south east. You are getting more for your money. Property to buy remains artificially high in Brighton with many sellers still chancing their arm but I have come across vendors reducing the sale price by 10 -15% to get the sell as they realise that the original price is becoming increasingly unrealistic.
John, Brighton, UK
I was renting in London for 2 years. my girlfriend and I paid £700 a month for a one bedroom flat that wasn't very big and wasn't in particularly good condition. when we found out we were expecting our first child, I enquired about getting a mortgage but as I didn't have a big enough deposit I was turned away. The only other option I had was to rent a two bedroom flat but at £1000+ this was impossible. I am now living in northern Ireland and I rent a 3 bedroom semi for £350 per month
Robert, Northern Ireland
People should stop looking at property as merely an investment and more as a home, rather than trying to second guess the market the whole time. The really sad thing is that with assured short hold tenancies, no tenant can feel really at home, hence everyone is desperate to buy their own piece of security. If the council housing stock had been replenished at the same rate it was sold, there wouldn't be such a demand or high rents in the private market - or so many houses snapped up by investors because there wouldn't be the profit to be made. If we look at the rest of Europe, there isn't this desperation, and I think its because tenants feel more secure. There's too much on the side of the landlord at the moment.