Renters must earn over national average to be able to buy

The gap between average incomes and the pay of tenants who want to buy their first property has reached a post-recession high.

Analysis of data from the Office of National Statistics and the Council for Mortgage Lenders shows that the average income to support a first time buyer mortgage is £38,977 - that’s £11,332 higher than the average UK salary of £27,645.  

This is the widest gap there has been since the recession, signalling how access to home-ownership in the UK has become increasingly exclusive – and indicating why the lettings sector is likely to grow in the future.

The income gap has grown considerably in recent years in response to tighter lending criteria and rising house prices, making it harder to get onto the property ladder and blocking many from home-ownership without support from a partner, family member or government scheme.

In comparison, the gap between the average salary to support a first time buyer mortgage and the average UK salary was just £3,170 in 2000 and £7,505 in 2011.

In London the average salary supporting first time buyer loans is almost £58,500 or 65% more than the UK average. 

Compared with regional salary growth of just 1.3%, London has seen first time buyer incomes rise by 19.4%.

This means that the first time buyer to average income gap in London equates to £23,142, more than double the UK average of £11,332. It is also 3.9 times more than in Yorkshire, where first time buyer to average income has the smallest gap. This again highlights the massive difference between the haves and have-nots.

The research was conducted for mortgage insurer Genworth.

https://www.landlordtoday.co.uk/breaking-news/2016/3/renters-must-earn-over-national-average-to-be-able-to-buy