Yorkshire: House dreams hit as huge rent rises thwart saving for deposit

Leeds ranks as the most expensive location to rent a property in the North and the Midlands while York comes in close behind, with annual costs sapping annual incomes by as much as £10,000.

Housing experts have warned the price of privately rented homes is draining the incomes of anyone hoping to save up a deposit to buy a property.

The revelations have come in the wake of a Government-commissioned report which calls for the legal requirement for builders to include a quota of affordable homes in new housing developments to be dropped.

The review of the private rented sector by Sir Adrian Montague, the chairman of private equity firm 3i, said councils should consider using powers to waive the requirement to construct homes available for those on lower incomes to buy to ensure the number of properties built to let increases.

The National Housing Federation’s lead manager for Yorkshire and the Humber, Rob Warm, claimed Leeds and York have become victims of their own success, with both cities witnessing buoyant economies despite the financial crisis.

But he warned that rival towns and cities in the North could benefit as people look to live and work in other locations providing a cheaper cost of living.

He said: “York and Leeds are two of the most desirable locations to live in the North, and with that comes a cost which is now proving to be unsustainable.

“One of the biggest issues is that people who are trying to save up to buy their own house are finding it impossible as their incomes are being used to pay for their rents.”

In Leeds, the cost of renting in the private sector during the last financial year was £10,188, the equivalent of 46.9 per cent of the annual average wage of £21,710. The cost of renting in York was £9,372 in 2011/12, the equivalent of 49.5 per cent of the average annual wage of £18,938 in the city.

By comparison, average annual rents in Manchester were £6,372 – equating to 28.6 per cent of the average annual wage of £22,251. In Newcastle, average annual rents were £5,076, the equivalent to 25.3 per cent of the average £20,072 wage in the last financial year.

The national review of the private rented sector also recommended setting up a task force to encourage build-to-let investment and the release of unused publicly-owned land for development. But critics warned proposed changes would come at the expense of people desperately struggling to get on the property ladder, and the study was challenged by industry groups, councils, charities and Labour.

The chairman of the Local Government Association’s environment and housing board, Mike Jones, said: “Any strategy to boost the number of new rental homes should not come at the expense of new affordable housing, and councils will in consultation with their residents always seek to ensure a suitable balance between the need for private rental property and new affordable homes.”

Shadow Housing Minister Jack Dromey welcomed proposed measures relating to the use of public land, attracting investment and increasing standards in the private rented sector. But he said the Government should be addressing the affordable housing crisis and not looking for ways to “water down” existing legislation.

He added: “Huge cuts to Government investment in housing, a lack of liquidity in the finance markets, the failure of banks to lend to home buyers, and stagnating demand are the real hurdles to viability, not the cost of providing much- needed affordable housing.”