A think tank claims that when it comes to space within a home, private rental sector tenants pay three times as much as mortgage-borrowers.
Using 2021-22 figures - the latest available - the Resolution Foundation says that “square metre by square metre, they are paying on average more than three-times as much as mortgagors for their housing (around £11 per square metre for private renters in 2021-22, compared to just over £3 for mortgagors).”
However, this of course excludes the mortgagors’ principal payments for the property, and instead simply compares rent with mortgage payments.
The foundation continues by saying that in 2022-23, the average family renting in the private sector spent around a third of their income on housing costs, compared to the average mortgagor who spent closer to a tenth of their income, despite the latter facing far higher interest rates than has been the norm since the financial crisis.
The foundation adds that “doing nothing to help at least low-income private renters with housing affordability is likely to be increasingly untenable over the next parliament” because of the high number of households in temporary accommodation - nearly 113,000 by the end of 2023.
And it says that although the last Conservative government re-linked Local Housing to the statistically-significant 30th percentile of local rents in April this year, this was a one-off move. The foundation says that this means “if no changes are made, LHA will become increasingly disconnected from local rents once again.”
It adds: “Repegging housing support permanently to trends in local rents is far from cost-free, but the pressure will build on the next government to do just this as rents rise rapidly in the coming years.”
The Resolution Foundation describes itself as an independent think tank: its chief executive resigned this month to become a Labour parliamentary candidate.
Want to comment on this story? Our focus is on providing a platform for you to share your insights and views and we welcome contributions.
If any post is considered to victimise, harass, degrade or intimidate an individual or group of individuals, then the post may be deleted and the individual immediately banned from posting in future.
Please help us by reporting comments you consider to be unduly offensive so we can review and take action if necessary. Thank you.
.jpg)
.jpg)
Join the conversation
Jump to latest comment and add your reply
There must be some very strange mathematics going on there.
In this area a small modern 3 bedroom house costs about £300K to buy or around £1350 a month to rent.
Assuming someone has a 10% deposit plus money to pay for conveyancing fees the monthly mortgage payment would be £1547 a month on a 25 year mortgage. They also have to pay for insurance, boiler servicing, repairs and general maintenance. Realistically the interest they would be getting on the £30K deposit if it wasn't tied up in the house should also be counted, so that's another £125 a month. That strikes me as owning is at least £400 a month more than renting for the identical house.
Of course if all goes well the mortgage payments and maintenance, etc will eventually become lower than rent and they will build up equity in the fullness of time. However, illness or job loss could see them repossessed and loose everything as there's no Housing Benefit safety net for homeowners.
LHA hasn't been restored to the 30th percentile. It was increased in April but is still way below the cheapest available properties. In this area the cheapest one and two beds are around £100 a month more than LHA while the cheapest 3 and 4 beds are around £200 a month more than LHA. That's the cheapest, not the 30th percentile.
Those were the first thoughts that I had too Jo. That's not even taking into account a home buyer will be repaying a repayment mortgage and most LL's paying interest only too. Two thirds of rent I charge goes on interest only mortgage payment and maintenance charges. Maybe I'm not charging enough rent?
Yet again slanted against us P Landlords. And talking pish (We are SO bad according to folk like these how do we sleep. )
Quite right! How many times do we have to say, you can't compare mortgage interest with rent, which includes insurance and all maintenance costs.
Jo, we need to send you in there to calculate the figures for them, obviously another dim wit ranting on about how much landlords charge in rent!
The "average" mortgage holder didn't buy their house yesterday, some would have bought 20 plus years ago. may be a different story if it was families that had bought in the last six months.
The Resolution Foundation again proving that think tanks don’t. 😠
I do hope their former CEO is not elected as a Labour MP. 😉
Utter nonsense!
If that were the case they would all buy!
So much propaganda or bare faced untruths especially election month.
Very good Think Tank it’s so cheap to buy your own, what’s stopping you so I don’t know what all the fuss is about.
Now I must go and do something real to get away from this nonsense
I absolutely wish my rents were three times the cost of the mortgages. To arrive at such a ludicrous figure either his calculator is broken or he’s done some very very creative accounting and cherry picking of data.
Please login to comment