23% increase in the number of private renters since 2008
Annual cost of private rent increases by £572 a year

Analysis of the latest ONS English Housing Survey by Castle Trust shows that the number of private renters in England rose to 3.8 million in 2012, an increase of 23% from the 2008 figure of 3.1 million. Indeed 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.

The dramatic increase in the number of private renters and the cost of rent is increasingly worrying given additional recent analysis2 showed that monthly mortgage expenditure constitutes 30% of an average household’s total outgoings.

Castle Trust, which aims to provide a safer way to buy a home and a safer way to invest in property, believes households can search for new and innovative lending products to protect themselves from any potential rises in mortgage costs.

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% of the value of an owner occupied home alongside a repayment mortgage of up to 60% from a traditional lender and a deposit or equity of at least 20%. There are no monthly commitments on the Partnership Mortgage and Castle Trust will share 40% 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% of any loss made on a home bought with a Partnership Mortgage.

Castle Trust’s HouSAs are suitable for ISAs, Junior ISAs and SIPPs. Its Income and Growth HouSAs can be taken out for terms of three, five or ten years. The Income HouSA tracks any rise or fall in the Halifax House Price Index and also pays an annual income of between 2% and 3%, depending on the investor’s chosen term.

The Growth HouSA offers a multiple of between 1.25 times and 1.7 times any increase in the Halifax House Price Index and limits the loss to between 0.75 times and 0.3 times any decline. Both HouSAs are available for investments of between £1,000 and £1million.

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