Families now make up one third of the rental market as homeownership grows increasingly out of reach, new analysis reveals.
There are more than 1.5million households with children in the rental sector – a 121 per cent increase since 2004, according to specialist lender Perenna.
This means in the last two decades some 834,000 more families have been forced to privately rent as taking the first step on to the property ladder becomes an untenable dream, the analysis of official Office for National Statistics data reveals.
House prices have spiralled upwards in the past decade and have now reached their highest ever sold price – £300,000 on average – according to lender Halifax.
Families have been disproportionately forced to rely on private rental homes
This means an average first-time buyer would need to raise a £30,000 deposit. And as rental payments are still high, many households are finding it increasingly harder to save that 10 per cent pot.
It means hopeful first time buyers are having to wait longer before snapping up a starter home, and may even have started a family by this time.
Renting is often seen as more unstable than homeownership due to high monthly payments, the possibility of eviction and more regular home moves. Plus, it means your monthly payments are not building equity in a property.
But families have been forced to disproportionately rely on rental homes compared with those without children, the data shows.
While the rise in the number of households with children grew by just 1 per cent over this period, the proportion in rental accommodation soared by 121 per cent.
This is compared to a 99 per cent increase in the number of households with no children in rented homes.
Meanwhile, the number of families with a mortgage dropped by 803,000 – or 20 per cent – in the last two decades, from 4 million to 2.3 million.
And as stretched affordability means less people can get a mortgage, rental demand has soared which has bolstered monthly prices.
This, in turn, makes it increasingly harder for families to funnel spare cash aside every month to build a chunky house deposit, especially in the southeast of England.
Colin Bell, of Perenna, says: ‘Our analysis paints a stark picture. We have been stuck in the grips of a mortgage affordability crisis for nearly two decades, compounded by a lack of suitable housing stock and a simultaneous lack of investment in alternative tenures.
‘This reality is leaving hundreds of thousands of families unable to get onto the property ladder at all, exposed to ever rising rents and often, unsuitable properties, and we need to find a much more effective way to support them.
‘Longer-term fixed rates will enable families to access more finance, giving them the ability not only to get on the ladder, but to stay on it in property that suits them.’
Affordability is improving for those purchasing starter homes. A handful of major high street lenders have recently relaxed which means that means buyers can borrow as much as six times their annual income – or 6.5 with HSBC for high earners.
Plus, Santander recently launched a mortgage with a maximum 98 per cent loan to value, which is designed for those with limited deposit savings to get on to the property ladder.
