Rent now, buy later

It costs young Londoners £6,000 a year more to rent than to buy. A new scheme for first-time buyers allows them to pay rent for a property now, with a chance to buy later
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Olivia Howitt, 35
After renting privately in Dalston, Olivia Howitt has been able to buy a new two-bedroom Hackney flat through Family Mosaic
Should you buy or should you rent? There was a time when young Londoners had a choice but today, renting is the only option for most - despite it being more expensive than buying across 90 per cent of Britain.

The average monthly rent in the capital is 28 per cent higher than the cost of ownership, leaving tenants paying an extra £5,964 a year. Buying is cheaper than renting in 45 of the UK's 50 largest towns. Milton Keynes tops the list of towns where buying beats renting (renting is 39 per cent higher there).

To rub salt into the wound, rents are rising as demand soars, reaching a record high in the capital of £2,075 a month (or 76 per cent of average household take-home pay). Last month, there were 25 applicants for every rental property, lettings agent Ludlow Thompson reports.

Until recently, there was no housing association provision for "intermediate renters" - those who cannot afford to buy but whose income is too high for them to qualify for housing benefit, and who are therefore reliant on private landlords.

However, associations have stepped in to offer low-cost rental homes to people who are employed (earning less than £60,000 a year, in the public or private sector) and able to demonstrate they are saving to buy an affordable home. Housing associations also take nominations from council waiting lists, so it is a good idea to register with your local authority, either the one where you live or work (or both).

London & Quadrant offers a "rent to buy" option called Up-to-You, which gives back part of the rent paid after five years. For more details of all the above initiatives and homes available, visit

Shared ownership is a halfway house, allowing people to part-buy and part-rent. The attraction is that a lower deposit is required because only a proportion of the property is being bought (typically between 25 and 30 per cent).

Mortgage options are improving for first-time buyers who can muster only a small deposit. Moneyfacts, a comparison website, says there are 268 deals at 90 per cent loan to value (LTV) compared to 199 at the start of the year. Yorkshire Bank offers a 95 per cent LTV deal, fixed at 5.69 per cent for three years. HSBC has launched a range of competitive deals for buyers with a deposit of at least 10 per cent. This includes a fee-free two-year fix of 4.49 per cent.

Meanwhile, figures from London-wide estate agent Winkworth (visit show a huge variation in private rents. In general, rents are lower in south London, outer north London and parts of east London. While the cost of a one-bedroom flat in Notting Hill ranges between £1,200 and £2,600 per month, in Crystal Palace it is £625-£820.

Rents can also be compared on a "rents map" website set up by the mayor.

Landing on my feet: 'people who share spend a lot of time in their bedrooms'

Olivia Howitt, 35, was able to buy a new two-bedroom apartment at Saffron House in Ramsgate Street, Hackney, through Family Mosaic housing association. She paid £99,750 for a 35 per cent share (full price, £285,000). Total monthly outgoings - mortgage, rent and service charges - are £861.46 a month.

Olivia moved from Manchester six years ago and had been renting privately in Dalston. She is assistant picture editor for Radio Times and has a blog called "What's in your bedroom... " "Space in London is at a premium so you find many people living in shared properties and spending a lot of time in their bedrooms, using them as workspaces for recording music, creating art, designing, socialising and storing stuff," she said. "I wanted to record that. The more bedrooms I photograph, the more personal worlds I see."

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