The increase in expenditure on rent by first-time homeowners over the past ten years amounts to £46,621.
The rising cost of living and escalating rent prices are posing significant challenges for many aspiring homeowners in the UK, as they find it increasingly difficult to save enough for a deposit.
According to recent data, first-time buyers now spend an average of £163,047 on rent before purchasing a home, a 40% increase compared to a decade ago when the figure stood at £116,427. This trend is particularly concerning, as it highlights the growing burden of rent on potential homeowners.
The North East region of the UK has the lowest average rent at £745 per month, while London, unsurprisingly, has the highest at £2,253. Monthly rents soared by 5.7% in the year to August, with Wales seeing the biggest hike at 7.8%.
Generation Rent's chief executive, Ben Twomey, has called for Government action to limit rent increases, urging the devolution of powers to Mayors to control rent prices in their areas. The Government is also being urged to review mortgage deals with lower deposits, which often come with higher interest rates.
In response to regulatory changes announced by Chancellor Rachel Reeves, some lenders have begun to loosen mortgage affordability rules. Several mortgage lenders now offer loans with deposits of less than 5%, including the Newcastle Building Society, which launched a 2% deposit deal for mortgages last week. However, there are restrictions on who can apply for these deals.
Despite these challenges, the average first-time buyer in the UK now rents for 12.8 years on average, compared to 11.4 years a decade ago. To put down a 10% deposit on the average property, which currently stands at £270,000 (according to Office for National Statistics data), a pot of £27,000 is required. Remarkably, today, the amount spent by first-time buyers on rent is enough to put down a 60% deposit on the average home.
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The search results do not provide information about the changes in average mortgages for first-time buyers in the UK over the last ten years. Nevertheless, it's clear that the current situation is placing a substantial strain on potential homeowners, and action is needed to address this issue.
