Renting is often an option taken when people don’t have the resources to buy a property. It enables people to have a place to live whilst gathering enough funds to get a mortgage. Although renting is viewed as a cheaper alternative to buying, the cost of rent has doubled in the last decade. Furthermore, the cost of rent could eventually overtake the entire amount paid for mortgages by homeowners.
The total amount of rent paid by UK tenants escalated to over £50bn in 2017. The UK’s largest estate agency and mortgage broker Countrywide compiled the data, which shows the property market changing dramatically. In recent years, home ownership levels have essentially reversed.
During 2017, tenants paid a total of £51.6bn in rent, which was an increase of £1.8bn on a previous year and double the £22.6bn paid in 2007. Over a similar period, the trend in homebuyers shows a significant decrease – the exact opposite of renters. In 2008, a peak £63.8bn was paid by homebuyers for their mortgages. In 2017, £57.4bn was paid as lower interest rates and cheap fixed-rate deals greatly benefitted buyers.
The generation who were born between 1977 and 1995 (also known as the millennial generation) are currently dealing with the largest part of the rental fee increase. The extent of the rent increase is highlighted by the fact that many tenants are using more than half their wages just to pay for their homes. As a result, campaigners are urging for rent controls be put in place as soon as possible before rent prices increase any further.
Renting is often the only option for people, with social housing unavailable and owning a property is out of reach. As a result, these people will choose to rent from a private landlord and face being part of the population who will collectively see a £30bn increase in their rent.
Some argue that renting may not be the best option when the money spent could be used to put towards a mortgage or the cost of living. The government is now being urged to invest in new homes and get a control on the escalating cost of rent.