The cost of private renting rose by £572 a year per household in England between 2008 and 2012, with a total increase of £7.7 billion in that time-frame.
New analysis from housing investment and shared equity mortgage provider, Castle Trust, showed that the number of private renters in England rose to 3.8 million in 2012, a 23 per cent increase on 2008.
The average annual amount paid on private rent increased by £572 or seven per cent from £7,956 in 2008 to £8,528 in 2012.
Recent analysis also showed that monthly mortgage expenditure constitutes 30 per cent of an average household’s total outgoings.
Sean Oldfield, chief executive officer, Castle Trust said: “Despite mortgage rates being well below their historic average, renting is booming as homeownership becomes more and more of a distant dream. Mortgage payments represent a significant proportion of a household’s monthly spending and many people do not see the viability of owning a home.
“The risk of rising mortgage rates is a major issue for homeowners with their finances already under pressure and shared equity can play a major role in reducing risks, including the risk of going into arrears, by cutting monthly mortgage commitments.”
Castle Trust is offering a new type of shared equity, called Partnership Mortgages, which enables homeowners under the age of 55 to issue equity in their home, as well as investment products, called HouSAs, which enable savers to invest efficiently in the national housing market, tax free if through their SIPP or ISA.
Partnership Mortgages are for 20 per cent of the value of an owner occupied home alongside a repayment mortgage of up to 60 per cent from a traditional lender and a deposit or equity of at least 20 per cent. There are no monthly commitments on the Partnership Mortgage and Castle Trust will share 40 per cent of any profit made by the homeowner when they sell or come to the end of the mortgage term. The company will also share 20 per cent of any loss made on a home bought with a Partnership Mortgage.
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