Tenants Paying over Double what Homeowners Pay in Mortgage Interest
Tenants are paying more than double what homeowners pay in mortgage interest, according to the latest report from Savills.
The agent insists that this underlies the need for more rental stock across the UK.
Using a range of data from UK Finance and the Office for National Statistics (ONS), Savills worked out that, in the year to June 2017, tenants paid more than £54 billion in rent to private landlords, compared with £26.5 billion in mortgage interest payments from homeowners.
The total private rental bill for Great Britain has risen by £14 billion over the last five years – up by 35% – while the number of homes in the private rental sector has grown by just 21%.
In comparison, the amount of mortgage interest owed by homeowners has fallen by £6.4 billion – largely due to low interest rates, the agent reports.
Of course, Savills points out that some of the increase will be due to there being more people renting their homes, rather than simply the amount paid going up.
For example, private tenants in England made up 19% of housing tenure in 2015, increasing to 19.9% in 2016, while the proportion of owner-occupiers dropped from 63.3% to 62.9% in the same period.
Similarly, in Scotland, the proportion of rental households rose from 14% to 15% between 2015 and 2016, while the percentage of those owning their own homes has remained flat.
The Head of Residential Research at Savills, Lucian Cook, comments on the findings: “It is widely accepted that the solution to the affordability crisis in homeownership is to build many more homes.
“The same is true in the private rented sector. Savills’ analysis for the British Property Federation [BPF] shows that there are now almost 100,000 Build to Rent homes under construction or in planning across the UK, up from 48,000 last year.”
He adds: “This is real progress, but we need policy that encourages the rapid expansion of Build to Rent.”