Generation Rent may be used to high living costs, but unfortunately, those costs look set to rise even further, with new figures showing that average rents continue to edge up – particularly for smaller properties.
The figures, from the latest Landbay Rental Index, show that the average rent for a one-bed property in the UK grew by 0.12% in September, bringing year-on-year growth to 1.57%. Rents for two and three-bed properties also grew in September, but at slower rates, rising by 0.09% and 0.11% respectively.
Overall rental growth stood at 0.09% on a monthly basis, down from 0.12% in August, taking annual growth to 1.65% (down from 1.83%). Monthly decreases aside, the average UK rent, regardless of property size, now stands at £1,187 – a hefty sum by anyone's standards, but particularly painful for those who want to be saving up to buy their first home.
It could be even tougher for those in a one-bed property, with its strong growth suggesting that demand for such properties remains buoyant. This level of demand appears to be keenest in Scotland, where one-bed rents rose by 0.36%, followed by the East of England (0.35%) and the East Midlands (0.29%).
This all paints a worrying picture for those trying to get that first step on the housing ladder, and there are calls for further help to be given to first-time buyers. Indeed, the figures follow a call from Housing Minister Gavin Barwell for lower minimum space requirements for new build properties – ideally, this would encourage the construction of smaller homes or starter properties, thereby improving affordability and boosting supply for first-time buyers.
However, there's no denying that rent payments remain the key financial pressure for aspiring homeowners, and with rents only ever on the rise, it could become increasingly difficult for tenants to build up a suitable deposit.
So what can you do? The key is to be as strict as possible when it comes to your outgoings, so set yourself a monthly budget and scrutinise your bills to can see where improvements can be made. Put everything you can into a dedicated savings account and you'll hopefully soon see your balance start to edge up. You may want to make a beeline for the Help to Buy ISA, a Government-funded initiative that will give you a 25% top-up on everything you save, up to a maximum of £3,000.
Then it all comes down to finding the right first-time buyer mortgage, and with rates at record lows, now could be a great time to get in on the action.
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