By Mark Fairlie.

A new online tool allowing users to find out how much it would cost them in rent over 50 years in their chosen postcode has been launched by window furnishings company, Thomas Sanderson.

As well as showing the cost of renting a property over that period, the tool compares that figure with the average cost of buying a house in that area. For example, renting in Whitley Bay in North Tyneside (NE25) for 50 years costs £280,000 whereas the average house price in that postcode is £195,822, showing a difference of 43% in pricing between these two options.

Most and least affordable areas

According to the company’s marketing director, Richard Petrie,

“(t)here is often a misconception that renting is cheaper than buying a house, but when you look at the cost over 50 years, renting usually ends up a lot more expensive. We wanted to show this information in an accessible and interactive format, which is why we came up with this handy tool”.

The tool highlights the difference in house values and market rents between more and less affluent areas of the country. The least affordable areas are:

  1. Virginia Water, Surrey – £2,426,400
  2. Cobham, Surrey – £2,322,000
  3. Esher, Surrey– £2,300,400
  4. Ascot, Berkshire – £1,993,800
  5. Windlesham, Surrey – £1,938,000

The most affordable areas, at the time of writing, are:

  1. Darvel, East Ayrshire – £187,200
  2. Langholm, Dumfries and Galloway – £188,400
  3. Stranraer, Dumfries and Galloway – £194,400
  4. Halkirk, Caithness – £198,000
  5. Annan, Dumfries and Galloway – £200,400

Who is Generation Rent?

New Online Tool Shows Cost to Rent in any Postcode for a Lifetime

For many campaigners, the figures highlighted by this tool demonstrate many people’s inability to afford a property. In NE25, according to Adzuna, the average salary is £30,342. The Money Advice Service website states that some borrowers may be able to take out a mortgage of up to 5 times their salary. In this case, the maximum mortgage available for a potential homeowner would be £151,710, leaving them requiring a deposit of £44,112 to move into an average priced home in that area.

In 1995, the average mortgage was two times a person’s annual salary (source: Nationwide house price benchmarks, HousePriceCrash campaigning website). The ratio peaked just prior to the financial crisis in 2008 at around 5.25 times salary. However, according to the Office of National Statistics, that figure had risen substantially to 7.6 times salary in 2016.

According to the Institute for Fiscal Studies, the cheapest local homes (those priced below the averages stated on the Thomas Sanderson tool) are not affordable for 40% of young people.

As reported in the Independent, up to half of people in their 40s will be renting and a third by the time they claim their pensions if current trends are maintained, according to the Resolution Foundation. “Millions of millennials will never own their own homes so it’s time to make renting work better”. This is “Generation Rent”.

Potential solutions

Various different campaigning bodies are lobbying the government to make fundamental changes in the housing market for purchasers and renters.

The Generation Rent organisation campaigns for “professionally managed, secure, decent and affordable private rented homes in sustainable communities”. PricedOut is pressuring the government to “build more homes and reduce the cost of decent housing” for would-be buyers.