As many people will be recovering from hangovers and over spending this festive period another blow awaits them in the coming year. Rent is set to increase nationwide as the demand for housing increases as first time buyers still struggle to get onto the property ladder. Most people putting their homes up for sale are refusing to reduce the asking price therefore most people who are on the average or lower than average salary are still not able to afford the strict requirements for a mortgage.
It has been 4 years since I last rented an average sized flat before buying my own house and I too can see how much rental properties are also charging ridiculous sums of money. In 2004 a one bedroom flat with a large lounge / diner, kitchen, bathroom and allocated parking in a well sought after location close to bus and train networks was in the region of £500 – £600 per month. The same type of accommodation is now more in the region of £700 – £800 so people who have invested in buy to let properties are still making money and the ones profiting in this recession. The hike in rent is expected to be between 10-15%!
Although landlords are not as successful as they were a few years ago they are still making more money than homeowners who need to sell their property as most are now just breaking even, falling into negative equity and making a loss rather than a profit.
Unfortunately there is little we can do about this sudden shift in demand for housing, even councils are struggling to re-home or find homes for people who are not able to afford private housing so councils are having to place people into temporary housing such as B&B’s and hostels. Buying a house may seem a stretch but it is well worth it in the long run, why work all your life with nothing to show for it? At least if you have your own home you will have access to some money by releasing some equity and also any children you may have will be left with some money when you pass away. Many first time buyers are also renting out a room or two to make some extra money during this hard financial time but remember that if you do this you will need to inform HRMC and may be liable to pay tax on such earnings.