Young people 'have to rent for longer'

Rising property prices and interest rates mean that more young people may have to stay in rented accommodation for longer, a new report suggests.

According to the Council of Mortgage Lenders (CML), the average first-time buyer in the UK now has to pay 18.7 per cent of their income servicing the interest on a mortgage if they want to buy a property.

This is the highest level since 1992 and reflects how much first-time buyers are struggling to be able to afford to buy property.

Faced with this problem, it seems likely that more people will delay buying their first property and mean that the market for residential lettings should remain buoyant in the future.

"Month on month we see affordability constraints for first-time buyers worsening," explained CML director general Michael Coogan.

"And with the impact of May's interest rate rise still to be felt, many borrowers face higher costs in the coming months."

A recent report from Rics suggested that 16 per cent more chartered surveyors reported a rise rather than a fall in lettings in the first quarter of the year.