Member Article

500,000 North Easterners resigned to renting

More than half a million North Easterners are resigned to the prospect of never owning their own home.

Figures from insurer Aviva show that 27% of adults believe they will never be in a position to purchase a property of their own, the equivalent of 540,000 people in the region.

The research shows that eight out of ten people aspire to owning their own home, nearly a third – 600,000 North Easterners - believe they will never be able to afford the home of their dreams.

Further data from fellow insurer AXA reports that 44% of tenants say that they rent because they cannot afford to buy and that the average UK tenant expects rent for at least a further ten years.

North East-based sales and lettings firm KIS last week revealed that over the course of ten years increases in the cost of living will see North East renters lose the equivalent of £124 from the value of their rental deposit – even in the 97% of tenancies when that deposit is returned to them.

Further analysis from the firm shows that landlords renting out properties in the region can expect to achieve the highest-ever return on their investment recorded, with investors currently attaining net annual rental yields of 4.6%.

There has been more good news for prospective property investors with at least six lenders – TSB, Virgin Money, NatWest, Investec, Skipton and Dudley- this cutting their buy-to-let mortgage rates.

Ajay Jagota is managing director of KIS – the first letting firm to abolish rental deposits – and the founder of Dlighted, a deposit replacement insurance for letting agents and the private rented sector.

The anti-deposit campaigner said:

“Half a million North Easterners are resigned to renting, with affordability a key obstacle when it comes to getting a foot on the housing ladder.

“Although many people prefer the flexibility and freedom of renting, we continue to place silly obstacles in the way of people who do dream of becoming homeowners – in particular rental deposits.

“It seems to me simple common sense that renters should be saving that money for a deposit on their own property, not wasting it on a rental deposit it’s all-but inevitable they’ll get back any way.

“Nonetheless it’s clear a large proportion of people expect to be permanent renters rather than homeowners, and they will all need good quality homes. Record returns and low mortgage rates mean that there’s rarely been a better time to invest in property, particularly in the North East.

“New Housing Minister Gavin Barwell this week hinted that the government is shifting its focus away from home ownership, acknowledging that we need to build houses of every type of tenure.

“It’s important recognition from the government too that despite many people’s dreams of home ownership, privately rented properties have a critical and growing role to play in meeting Britain’s housing needs.”

This was posted in Bdaily's Members' News section by Ajay Jagota .