New buyers in the UK rent on average for seven years before buying, new research shows
Home owners in the UK rent for an average of seven years, spending £41,900 on rental payments before buying their first property, according to new research.
Some 15% of new home owners have been renting for 11 years and those who never get on the property owning ladder a lifetime of renting is set to cost hundreds of thousands, says the research from Santander Mortgages.
Indeed, using current private rental prices, which according to Santander’s study is on average £474 per tenant per month, those renting will pay upwards of £296,000 during their lifetime.
The research points out that in addition to monthly payments, most private rental tenants are also asked to put down a security deposit, which currently stands at an average of £657 per tenant. Only 39% of those currently renting received the full deposit funds back, with the average amount withheld by landlords being £130, or 20% of the average initial deposit.
The study suggests that the average home owner changed home every three years whilst renting, which means those who eventually purchased a property on average lost £3,113 of their deposit funds. Those renting throughout their lifetime and moving home with such frequency could see their landlords withhold an average of £2,201 throughout their renting lifetime.
‘Renting may appear to be the most financially viable option for some people, but in the majority of cases it isn’t the most cost effective. Over the years, payments made by rental tenants amount to a staggering sum, and these are not funds that you can recoup,’ said Miguel Sard, head of Santander Mortgages.
‘The mortgage market is extremely competitive at present, with options available to suit most budgets. Raising sufficient deposit funds can be one of the biggest barriers to purchase, but our new range of Help to Buy mortgages offer competitive fixed and tracker rates to buyers with a 5% deposit, while our standard products also cater for buyers with deposits of 10% or more,’ he added.
With Santander the Help to Buy mortgage guarantee range offers competitive fixed and tracker rates starting from 4.99%, with a minimum deposit of 5% of the purchase price and no booking fees on properties up to the value of £600,000. All products come with the Homebuyer Solution as standard, which includes a free valuation plus £250 cash back, helping customers with the upfront costs of purchasing a property.
Santander has also extended its higher LTV product range with two new fixed rates at 85% LTV, one at 2.89% rate with a £995 fee, and the other at 3.99% with £495 fee.
Santander 1|2|3 current account customers who pay their monthly mortgage payment by direct debit also benefit from receiving 1% cash back on maximum monthly mortgage payments of £1,000.
Article courtesy of PropertyWire