Splashing the Cash
Tenants now find it more difficult to buy in areas they were renting in.
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Tenants in the South East of England tend to move the farthest to get onto the housing ladder. This is where the gap between the cost of renting and buying is largest in the UK and has widened the most since 2012. Across London and the South East prices have increased 42% since 2012, while rents have only increased by 19%.
The gap between the costs where people can afford to rent and where they can afford to buy has widened in every year since the downturn in 2008. Half of tenants who took their first steps onto the housing ladder in 2015 bought outside the town or city where they had been renting, up from 39% in 2008. Tenants from the most affluent Inner London Boroughs tend to move the furthest, skipping over the commuter belt and into small market towns beyond. Those renting in Outer Boroughs on the other hand tend to move to the other side of the M25 or to the coast.
The growing number of tenants moving further to buy is both a product of stretched affordability and first time buyers getting older. Tenants are increasingly choosing to compromise on location in order to own their first home. In the Capital, three quarters of tenants who bought in the last year, ended up living somewhere where houses were cheaper than where they had been renting – with an average price gap between the two places of £93,000. The growing gap between places where people can afford to buy or rent is contributing to a change in tenure mix. London saw the largest fall in owner occupation and the biggest rise in private renting between 2001 and 2011.
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