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Two recent surveys have underlined the importance to younger people of getting away from what is increasingly seen as a ‘rent trap’, in which the high cost of rentals prevents them from saving a sufficiently large deposit to be able to buy a home.
The first revealed a substantial increase in the use of the ‘right-to-buy’ scheme for purchasers of first homes. Purchases of homes under the scheme from local authorities rose by more than 20 per cent (to 3,350) for the three months to the end of June 2016 compared with the same period the year before. The average price paid for a property under the scheme was £84,000. More than 56,000 homes have been bought using the scheme since 2012.
The total number of right-to-buy purchases for the 12 months ending 30 June 2016 was 12,246.
The average age of a first-time homebuyer is now 30, and the second survey showed that it is clear that, to the under-35s, owning a home is regarded as a better investment than making pensions provision, despite the latter’s high degree of tax efficiency.
Those polled claimed by a three-to-one margin that their top financial priority was to raise funds to purchase a property rather than put money into a pension. Interestingly, one in five of those polled had reduced their pension contributions in order to have more savings available before retirement age. One in four said that their chief financial issue was having sufficient income to meet bills as they came in.