More homes urgently to rent needed to boost rental affordability, according to international real estate adviser, Savills. Rising numbers of renters unable to access home ownership and low interest rate payments for those with their own homes mean that the total rent bill is now more than double the total interest being paid by mortgaged homeowners for the first time on record. Renters are now paying over £54 billion in rent to private landlords across Britain. This is more than twice the £26.5 billion mortgage interest paid by owner occupiers - a figure which excludes capital repayments being made on mortgages. The total private rental bill has risen by £14 billion over the past 5 years. This is a 35 per cent increase, while the number of homes in the private rented sector have risen just 21 per cent. By contrast, the amount of mortgage interest fell by £6.4 billion, largely due to low interest rates. Also, older homeowners have continued to pay down debt, thus reducing the interest rate bill. Just five years ago, the gap between the private rental bill and the mortgage interest rate bill was just £7.4 billion. It now stands at £28 billion. The increase in private rental bill has been greatest in London, where stretched affordability and constrained mortgage lending, has prevented more aspiring home owners accessing the market, creating greater competition for homes to rent. Here, the total rental bill has risen by 42 per cent over the past five years, to over £20 billion and now accounts for over a third (35%) of the total GB private rent bill and almost four times the total mortgage interest paid by owner occupiers in the capital. Rental need is growing rapidly as the housing market becomes less accessible due to house price growth and lending constraints. This is particularly impacting younger households, with those under the age of 35 now paying some 44 per cent of the total rent bill, equivalent to 4.5 times the mortgage interest paid by this cohort. “It is widely accepted that the solution to the affordability crisis in home ownership is to build many more homes,” says Lucian Cook, Savills head of residential research. “The same is true in the private rented sector. Savills analysis for the British Property Federation shows that there are now almost 100,000 build to rent homes under construction or in planning across the UK, up from 48,000 last year. “This is real progress, but we need policy that encourages the rapid expansion of build to rent.” Private rents (at over £54bn across GB) now twice owner-occupiers mortgage interest, due to rising levels of renting and falling mortgage interest rates
There is an urgent need for more build-to-rent homes to meet rising demand and boost affordability in the UK, according to estate agents Savills. For the first time, the total rent paid by tenants is double the total cost of mortgage interest paid by homeowners. Private landlords received £54bn ($72bn) in rent in a year, while £26.5bn in mortgage interest was paid by homeowners. The rental bill has risen by £14bn in the past five years, a 35% increase. "We need policy that encourages the rapid expansion of build to rent," said Lucian Cook, Savills' head of residential research.