60% of renters 'want to buy home'

%VIRTUAL-SkimlinksPromo%To let signsThe proportion of "trapped" tenants living in the rental sector has reached its highest levels in more than two-and-a-half years despite government efforts to make the jump on to the property ladder easier, a study has found.

Three-fifths (60%) of renters said they cannot afford to move out of the sector, showing an increase from 58% three months ago and marking the highest proportion recorded in property website Rightmove's findings, which started in 2011.

Lenders have been reporting more first-time buyers entering the market in recent months following the launch of schemes such as Funding for Lending, NewBuy and Help to Buy, which have helped to make mortgages much more accessible.

Rightmove suggested that the record number of trapped renters it has found is the result of those tenants who were able to move out of the sector to buy a property having done so as a result of these schemes.

The large chunk of renters left behind who would like to buy but cannot afford to has been added to by former home owners who have returned to the rental sector in the tough economy.

Around one third (31%) of trapped renters said they had previously owned their own home.

Despite the continued challenges in getting on the property ladder, 96% of current renters said they still dream of owning their own home at some point and one in six (16%) of those expecting to buy their first home this year were 40 years old or over.

Miles Shipside, director of Rightmove, said: "Even though some agents are reporting an increase in those buying and escaping the rental trap, the growing number of new households and former homeowners returned to the rental sector keeps producing new tenants."

Recent research from Halifax found that first-time buyer numbers soared to their highest levels in the first half of this year since 2007. However, a growing proportion of these buyers found themselves having to pay stamp duty on top of raising funds for a deposit as house prices rose.

More than half (51%) of this year's first-time buyers bought homes which were over the £125,000 stamp duty threshold, at which a rate of 1% kicks in, up from 44% a year ago.

The Rightmove study found that only 15% of potential buyers said their deposit saving is on course amid high inflation, poor returns on savings and sluggish wage growth.

Rents have soared due to high demand in the rental sector but have shown signs of slowing down in recent months as tenants have left the sector to buy a property.

Help to Buy, which will be fully fired into action next year, will underwrite £130 billion of low-deposit mortgage lending with state guarantees.

Mr Shipside said: "While it's tough to save, especially when you're paying rent and it's rising, the window of home ownership will be flung open again...

"For some that have been unable to reach the higher deposit criteria, it could be a real leg onto the property ladder."

More than 3,200 tenants took part in the Rightmove survey last month.

Housing Minister Mark Prisk said: "I am determined that if people want to work hard and want to get on the housing ladder, that there is Government help available for them to do that.

"That's why we've introduced the Help to Buy: Equity Loan scheme, which offers a valuable alternative to the Bank of Mum and Dad to creditworthy buyers and enables people to buy with a fraction of the deposit they would normally require.

"The Help to Buy mortgage guarantee scheme from January will further increase the availability of mortgages to otherwise creditworthy first-time buyers with small deposits.

"And to help people who want the flexibility that renting offers we're building a bigger and better private rented sector with £1 billion funding to build homes specifically for private rent, to offer greater choice and quality of homes for tenants."

© 2013 Press Association
Read Full Story