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By Spencer Gordon, Feb 12 2016 11:40AM

First-time buyers will have spent on average nearly £53,000 on rent in their lifetime before they have saved enough to buy a home. And those starting to rent in 2016 are projected to pay more than £64,000 into landlords' pockets before they can afford to buy a property. That is according to the Association of Residential Letting Agents (ARLA) in its Cost of Renting report.

Arla, which compiled its report with the Centre for Economics and Business Research (Cebr), said the average first-time buyer will have spent 16.4% of their total lifetime earnings on rent before stepping on to the property ladder. The generation after will spend even more.

High house prices, which the Office for National Statistics (ONS) said rose 7.7% to £288,000 on average in the year to November 2015 in the UK, are shutting many aspiring homeowners out of the market. First-time buyers are struggling to save a sufficient deposit, while those with savings may not get a mortgage large enough to buy a home, particularly in London and the south east of England.

That leaves many in the private rented sector, where rents have spiralled in recent years because of a shortage of housing supply and high demand.

In England, private rents rose 2.5% over the year to December 2015, said the ONS, while pay excluding bonuses increased by 1.9%, squeezing renters' finances. Private rents grew by 3.9% on average in London over the year to December 2015 but pay growth was flat for full-time workers in the city.

"The rising cost of rent in this country is a huge issue, and is preventing tenants from being able to save to buy a home," said David Cox, managing director of Arla. "Our Cost of Renting report reveals that tenants are already spending a significant proportion of their income on rent and therefore struggling to save any money. However, as house price affordability worsens and interest rates start rising, more pressure will be put on renting with weekly rent likely to rise, so home ownership will remain out of reach for many.

"Rents are becoming alarmingly unaffordable due to the lack of available housing; the north-south divide we're currently seeing in the UK is a clear illustration of this. The London rental market is competitive, with far more prospective tenants looking for properties than actual houses available. This is pushing up rents in the capital, which will continue to put pressure on surrounding areas, including the south east, as Londoners relocate to avoid high rent costs."

By Spencer Gordon, Jan 18 2016 04:15PM

The latest Rightmove house price index has revealed that new property coming to market has risen in price by 0.5% (+£1,509) - the second highest rise at this time of year since 2007.

First-time buyers are also seeing a 6.6% year-on-year increase in the number of fresh-to-the-market homes in their target sector of two bedrooms or fewer, the highest since 2007. Additionally, the monthly price increase in this sector is at a near standstill (+0.1%, +£209), attributed to a keenness to attract buy-to-let investors before the April tax deadline.

Miles Shipside, Rightmove director, commented: “Upwards price pressure remains, with the second-highest rise seen at this time of year for nine years. The early snapshot of home-hunter visits in the first week of 2016 is up by 21% on the same period last year to 27.8 million visits, showing demand is not letting up either. Encouragingly for first-time buyers there’s more fresh choice with more property coming to market in their target sector. With their asking prices pretty much the same as a month ago, perhaps the knock-on effects of the more punitive landlord tax regime have arrived early and they now face a dilemma over whether to buy now or wait to see if prices drop in this sector over the next few months.”

Adrian Whittaker, Sales Director, New Street Mortgages, commented: “Today’s figures from Rightmove show that house prices continued to rise over what is typically a quieter period, as a lack of supply coupled with rising demand squeezes the market.

With this imbalance between supply and demand, the speed of a mortgage application could make the difference between having an offer accepted and losing out to another buyer. This makes it is even more important than ever for advisers to choose a lender that has the right technology and processes in place to offer a service that meets the demands of this fast-paced environment.”

Jeremy Duncombe, Director, Legal & General Mortgage Club, added: “This monthly increase in house prices is unusual for this time of year, and we expect house price inflation to climb further over the course of the year. The lack of supply is making the market more competitive and an expected increase in demand in the coming months is likely to exacerbate this issue. The government and housebuilders must work together to address this problem by building more properties of the right size and in the right places to accommodate those looking to buy.

The government must also look to encourage more efficient use of current housing stock by helping more people to ‘rightsize’ through tax incentives and cuts in stamp duty. This two-tiered approach will help to reduce the current imbalance between supply and demand and make homeownership a more achievable goal for many.”

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