Renting costs makes ownership a ‘pipedream’ for many tenants – here’s how you can get help
The sky-high costs associated with renting means that tenants are struggling to get onto the property ladder
RENTERS are struggling to get onto the property ladder because they're forking out so much money on renting a home.
According to a new report, three quarters of private tenants say the combined costs of rent, agency fees and moving make buying a home harder.
And having a high salary doesn't make much difference, the report by Citizens Advice found.
More than three quarters (78 per cent) of people from households earning £50,000 - the top 25 per cent of household earners - report that renting costs make buying a home more difficult.
A first-time buyer in the UK will need an average deposit of more than £30,000, while the annual cost of renting a home outside of London is more than £7,600, and more than £15,000 in the capital.
Gillian Guy, chief executive of Citizens Advice, said: “Owning a home is a pipedream for many due to the cost of renting privately.
“Households can find their efforts to save for a home of their own are undercut by the costs of renting."
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Guy continued: "Now that people are staying in the private rented sector for longer the government’s commitment to ban letting agents fees could help them to save thousands of pounds towards a deposit.
“The government also needs to look at how it can do more to help private tenants at the mercy of landlords and letting agents who are slow to carry out repairs, or rent out homes that fail to meet basic standards.”
A separate YouGov poll of more than 2,000 private renters reveals how letting agent fees also contribute to the overall cost of renting.
Of households earning £50,000 or more, two thirds (69 per cent) paid fees to their current letting agent, with some paying more than £1,000.
Twenty per cent paid between £250 and £499, 19 per cent paid between £500 and £999, and 9 per cent paid fees of £1,000 or more, the survey found.
Citizens Advice estimates that private tenants in England are spending in excess of £13million on letting agent fees each month, and said it welcomes the government’s plan to ban them - confirmed earlier this month in the housing white paper.
How to get help buying a house
THERE are several government schemes available to help you get onto the housing ladder.
- Help to Buy loan: This scheme is for those who have a 5 per cent deposit, and is only available on new-build properties that are worth less than £600,000. The government lends you up to 20 per cent of the property value (interest-free for the first five years) which gives you access to cheaper mortgages. You will need to pay this back at the end of the mortgage or when you sell.
- Starter Homes: First-time buyers under the age of 40 can access this new scheme. You'll get a 20 per cent discount on the market value of the property (new-build only) but you cannot sell or let the property for five years after you buy it.
- Shared ownership: This scheme is available to non-homeowners who earn £80,000 a year or less (£90,000 in London). People can buy a share of a home from a housing association and continue to rent the remainder. Buyers will need a 10 per cent deposit as well as money to cover stamp duty and other fees. You'll also need to find a mortgage lender that is willing to lend on shared ownership properties.
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