by Mark Johnston

Most potential first time buyers have now found themselves trapped within the rental sector, with no way out for the foreseeable future.

Ever growing numbers of first time buyers who have been unable to secure a mortgage have consequently pushed up rents by approximately 10% since the banking crisis struck in 2008.

Research by the property data firm,, suggests that it now costs more to rent than it does to pay a mortgage on the same property in at least 47 of 50 biggest towns and cities across Britain.

This it seems is mainly due to persistently low mortgage rates and soaring rents. The cost difference between paying a mortgage and paying rent has grown by an estimated 50%. For example, based on a 2 bed roomed flat for sale/rent in November 2011 and a 85% loan to value (LTV) repayment mortgage at 5%, it would cost £866 a month to rent compared with a £794 a month mortgage.

With more and more of first time buyers income going on accommodation they are finding it much more difficult to save, thus making the prospect of home ownership even slimmer.

Some letting agent’s data shows that in October 2011 the average rent was around £720 a month, but this figure disguises the big variations around the regions, as in London for example, the average rent has reached a massive £1,030 a month.

The latest buy to let index has indicated that average rents have increased by 3.5% annually, this is despite a monthly decline and other figures have shown that the average property rental is now £25 higher per month than in November 2011.

LSL property services added that “the cost of renting is still rising annually at nearly twice the speed of the average salary and many tenants will need to dedicate a growing portion of their disposable income to the cost of accommodation over the next year”.

Shelter, the housing and homelessness charity, carried out a recent study which showed that due to high rental costs at least 1 in 7 Britons have turned to payday loans in order to cover their rent.

These particular loans are highly unsuitable ways of paying for housing as they are intended for very short term use as some can charge as much as 4,000% APR and can therefore lead to debts  ‘snowballing’ out of control.

Martin Lewis, of, said of this, “it is incredibly worrying there is now evidence of people using payday loans to meet housing costs”.

Some buy to let investors have commented to this by saying ‘while they understand the frustrations of first time buyers in the present housing market, buy to let is a business like every other and like any business legitimate expenses have to be met’.

In conclusion many estate agents across the country believe that the limited supply of rental accommodation means there will still be a strong upward pressure on rents in the early part of this year (2012).

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