THE proportion of tenants trapped 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 per cent) of renters said they cannot afford to move out of the sector, showing an increase from 58 per cent 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 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 per cent) of trapped renters said they had previously owned their own home.
Despite the continued challenges in getting on the property ladder, 96 per cent of current renters said they still dream of owning their own home at some point and one in six (16 per cent) 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 per cent) of this year’s first-time buyers bought homes which were over the £125,000 stamp duty threshold, at which a rate of 1 per cent kicks in, which is up from 44 per cent a year ago.
The study found that only 15 per cent 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 on to the property ladder.”
More than 3,200 tenants took part in the survey.