"The current infrastructure of the property market means we’re encouraging our young people to get trapped into long-term renting over purchasing a home"
- Colin Bell - Perenna
New analysis from Perenna shows that first-time buyers are paying substantially more in rent before purchasing a home. The average cost of rent now stands at £163,047, a 40% increase from £116,427 in 2015.
Time spent renting continues to rise
The findings also reveal that the typical first-time buyer spends 12.8 years renting before buying, up from 11.4 years in 2015. Comparing this with longer-term trends, Perenna analysis shows that rising rent costs are forcing buyers to spend more time and money in the rental market, which can delay their entry onto the housing ladder.
With the average UK house price at £268,652, a 10% deposit would require £26,865. The extra cost of rent in recent years far exceeds this amount, suggesting that many first-time buyers could have saved a deposit if rental prices had been lower.
Rent versus mortgage payments
Colin Bell, COO and founder of Perenna, said, “There is a time and a place for renting. While some may make the personal choice to rent in the long term, others are forced into a seemingly never-ending cycle of rising costs. The current infrastructure of the property market means we’re encouraging our young people to get trapped into long-term renting over purchasing a home."
“Renting is ultimately money spent without return. Unlike mortgage payments, which include a capital element and build equity, rent offers no stake in the property and often doesn’t even strengthen someone’s credit profile, despite renters frequently paying more each month than they would with a mortgage. With house prices increasing overall, they could have spent their hard-earned money on an appreciating asset, but the market is failing to provide the right financial mechanisms to help lift buyers onto the ladder.
“Let’s stop obsessing over interest rates, which have little bearing on whether people can own a home. Instead, we should get building, roll out more low-deposit solutions, evolve the regulations to favour mortgage innovation, and get homes into the hands of our young people. We need to act now, with the support of regulators, the government and the wider private market, to roll out the solutions necessary to ensure we’re not in the same position in 2035.”
