The total amount of rent paid to private landlords in Britain is now more than double the amount of mortgage interest paid to banks by homeowners, as rising house prices push more people into the rental sector.
Renters paid about £54bn to buy-to-let investors across the country over the 12 months to the end of June, as the number of people renting property across the country rises and rents soar, according to new figures published on Monday by the estate agency group Savills.
At the same time, mortgaged homeowners have been able to take advantage of a prolonged period of low interest rates and cheap loans.
The interest paid by owner-occupier borrowers to banks has been falling over five years, and currently stands at £26.5bn, down by a total of £6.4bn from 2012, according to Savills. Over the same five-year period, the amount paid to landlords has risen by £14bn, while the number of homes in the private rented sector has grown by just over a fifth.
Lucian Cook, head of residential research at Savills, said that despite low interest rates, it has become increasing difficult for people to save for a deposit as wage growth slows and house prices rise.
“Fewer people have been able to benefit from the low mortgage rates, and we know that people are renting longer into later stages of life,” said Mr Cook.
In London, the total amount of rent paid is about four times the amount paid in interest to banks by owner-occupiers, according to Savills. The total amount of rent paid collectively in London was around £20bn in the 12 months to the end of June, and has risen by 42 per cent over five years.
Younger people are responsible for about half of Britain’s total rent bill, paying around £24bn to landlords over the past year.
The average share of income that Britain’s families spend on housing has trebled over the past 50 years, with young people dealing with longer commutes and smaller, less secure rented accommodation than their parents, according to the Resolution Foundation think-tank.
Last week, Labour leader Jeremy Corbyn raised the prospect of tighter rent controls as he set out plans to take on landlords in his speech to the party’s annual conference in Brighton. In comments that alarmed landlords, Mr Corbyn said the UK should adopt rent controls and impose a tax on undeveloped land held by developers.