Many young people in Britain have already accepted that buying their first house will be a monumental struggle, but could a surge in fees also price them out of renting a property?
Although house prices are falling and forecasters have suggested that, over the next five years, house prices will drop so they are at the same real level that they were at in 2002, the need for a large deposit and a lack of mortgage availability has made it almost impossible for first time buyers to get on the first rung of the property ladder. Ironically, the increase in comparison websites, such as MoneySupermarket, has meant that it has never been easier to check the latest mortgage rates at a time when mortgages are hardest to come by.
To make matters worse, this drop in the mortgage market is now affecting the private renting sector and rents across Britain are expected to have risen by as much as 20 per cent by 2016.
All of which is bad news for anyone looking to move into, or already living in, rented accommodation.
Unfortunately, this appears to be a growing number of the population, with some homeowners even entering the rental race as they are unable to sell their property. The so-called let-to-rent market is a growing area of the housing market as homeowners that can’t sell their property or don’t have enough equity to trade-up end up leasing it out to private tenants and before moving into rented accommodation that is more suited to their needs.
This has led to a situation whereby, in some areas of the country, there is an average of five tenants competing for every rental property on the market. Obviously, this competition for properties is pushing up rental prices but the problem is being exacerbated by an increasing number of amateur landlords that are looking to cash in on the booming rental market.
Figures released by the Council of Mortgage Lenders have revealed that the numbers of buy-to-let mortgages available to landlords are at their highest level since 2008 and there has been an increase of 39 per cent in the number of landlord loans taken out over the past year as supply struggles to meet demand.
This all makes for a real risk that both would-be homeowners and prospective tenants will end up being priced out of the market, but is anyone doing anything to address the issue?
The Confederation of British Industry (CBI) has called upon the government to introduce new measures that will, hopefully, give the mortgage industry a boost, such as an indemnity scheme that will protect lenders should homeowners fall behind on mortgage payments.
There have also been calls to tighten up the industry to protect tenants from rogue landlords, unscrupulous middle men and sub-standard accommodation, but it remains to be seen whether any of this will curb the potential housing crisis.