21 March 2013
More than half of “generation rent” have given up all hope of ever buying a home in London, an alarming new survey reveals today.
Housing charities said the findings show how the homes crisis is “crushing aspiration” by pricing young Londoners off the property ladder for good.
They come the day after Chancellor George Osborne unveiled a raft of emergency Budget measures to help first-time buyers, including state guarantees of up to £130 billion of mortgages.
The research by campaigning group Shelter found that 55 per cent of private renters do not believe they will ever own the roof over their heads because of soaring property prices and the challenge of raising vast deposits.
Just 10 per cent of renters polled chose to be tenants because they enjoy the “freedom and flexibility” it brings. But six out of 10 said they only rent because they cannot afford to buy.
Shelter’s chief executive Campbell Robb said: “Renting is now a way of life for hundreds of thousands of Londoners — and many expect to be stuck in the rent trap for years.
“Yet many find it hard to settle down and raise a family with the knowledge that a sudden rent rise or eviction notice could be around the corner.
“Until we can help more people on to the property ladder, we have to make renting work better for Londoners who have no other option.”
The Chancellor acknowledged in his Commons speech yesterday that “deposits demanded for a mortgage have put home ownership beyond the great majority who cannot turn to their parents for a contribution”.
The shortage of new homes and influx of rich foreign investors have pushed owner occupation below 50 per cent in London for the first time since Margaret Thatcher’s right-to-buy revolution of the Eighties. That has left thousands of young Londoners facing the prospect of decades of insecurity in rented homes on six- or 12-month tenancies vulnerable to the whim of a landlord.
Paula Higgins, of the HomeOwners Alliance, said: “The implications for London’s economy should not be ignored or accepted as the norm.
“Most people realise they must save hard for the chance to own a home. But even those who make sacrifices are now excluded from entering the London market and creating a stable environment for themselves and their families.” Young Londoners claim they are caught in a rent trap from which they cannot escape.
Average monthly rents in the capital rose 6.2 per cent to £1,092 in the year to February, property group LSL revealed — meaning the young hopefuls struggle to save a deposit.
Average home values in London now stand at £373,000. With the best mortgage deals requiring a minimum 20 per cent deposit, buyers have to raise a typical £60,000 up front.
We earn £100k but rent cripples us
Human resources executive Dan Hardaker, 29, rents a two-bedroom flat in Clapham with his partner for £1,600 a month. The couple cannot see any prospect of raising a deposit to buy a home for many years.
He said: “I moved to London for work four years ago and I am now paying three times the rent I paid in Brighton. Has my salary increased? Yes, but only by about 10 per cent. We cannot afford any of the luxuries which we should be able to with a joint household income of over £100,000.
We cannot even afford to save for a deposit. We did start to save £100 per month each but have had to spend this on increases in energy costs. We don’t qualify for any assistance from the Government as we have over double the household income that these schemes are limited to.
“Every month we line the pockets of a private landlord and can never dream of owning our own home — anywhere, let alone London where we live and work.”