Research by Skipton Building Society suggests that only one in eight renters can afford to purchase a property in the area that they live in. High rent, expenses, and house prices mean that those who rent are four times less likely to be able to buy a property than current homeowners are to move. The new index, compiled by Oxford Economics, used data from Skipton Group, the Office for National Statistics and the Bank of England to measure people’s financial ability to purchase and run a property in England, Wales and Scotland, taking into account the average-priced first-time buyer home in each area.
The figures suggest that those in the West Midlands and Wales have the hardest time getting onto the property ladder because of moderate house prices and low savings levels. London is also a very challenging area for first-time buyers because of high house prices. On the other hand, the research suggests that the East of England is an easier place for first-buyers because of higher wages, and Scotland has lower house prices. The report reveals that high rent and energy costs have made deposits unaffordable for tenants, and less than one percent of potential first-time buyers could achieve their housing goal in areas where they earn less than £22,850 per year.
Emma Harris, a software engineer, stated that renting and bills amount to two-thirds of her £50,000 annual earnings, and she is unlikely to ever own a house or flat. “I feel completely trapped in the situation I am in,” she said, “The chances of me owning my own house are pretty much non-existent…that I don’t have the money to put away each month to scrape together the money for a deposit.” Harris added that she is unsure whether the government’s plan to build more properties will help alleviate this situation, and she would like mortgage lenders to take her regular payments of rent into account when assessing her ability to make repayments.
Separate research by First Direct, part of HSBC, revealed that 33% of tenants in the private sector who recently experienced rent increases were unable to save any money due to financial stress. To manage their situation, Skipton offers tips to its customers, including making overpayments on their mortgage, moving to an interest-only mortgage, and extending the life of their mortgage.
Skipton’s Chief Executive, Stuart Haire, acknowledges the bleak outlook that some renters face. “Our findings paint a bleak picture, notably for first-time buyers,” he said. “High rent and energy prices make saving for a deposit even more difficult, regardless of their income.
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