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First-time buyers will have spent on average nearly £53,000 on rent in their lifetime before they have saved enough to buy a home. And those starting to rent in 2016 are projected to pay more than £64,000 into landlords' pockets before they can afford to buy a property. That is according to the Association of Residential Letting Agents (ARLA) in its Cost of Renting report.
Arla, which compiled its report with the Centre for Economics and Business Research (Cebr), said the average first-time buyer will have spent 16.4% of their total lifetime earnings on rent before stepping on to the property ladder. The generation after will spend even more.
High house prices, which the Office for National Statistics (ONS) said rose 7.7% to £288,000 on average in the year to November 2015 in the UK, are shutting many aspiring homeowners out of the market. First-time buyers are struggling to save a sufficient deposit, while those with savings may not get a mortgage large enough to buy a home, particularly in London and the south east of England.
That leaves many in the private rented sector, where rents have spiralled in recent years because of a shortage of housing supply and high demand.
In England, private rents rose 2.5% over the year to December 2015, said the ONS, while pay excluding bonuses increased by 1.9%, squeezing renters' finances. Private rents grew by 3.9% on average in London over the year to December 2015 but pay growth was flat for full-time workers in the city.
"The rising cost of rent in this country is a huge issue, and is preventing tenants from being able to save to buy a home," said David Cox, managing director of Arla. "Our Cost of Renting report reveals that tenants are already spending a significant proportion of their income on rent and therefore struggling to save any money. However, as house price affordability worsens and interest rates start rising, more pressure will be put on renting with weekly rent likely to rise, so home ownership will remain out of reach for many.
"Rents are becoming alarmingly unaffordable due to the lack of available housing; the north-south divide we're currently seeing in the UK is a clear illustration of this. The London rental market is competitive, with far more prospective tenants looking for properties than actual houses available. This is pushing up rents in the capital, which will continue to put pressure on surrounding areas, including the south east, as Londoners relocate to avoid high rent costs."