Renters face much longer waits to buy a home
First-time buyers could save for a property deposit more than four years sooner by living with their parents instead of renting, according to new research by mortgage adviser Alexander Hall.
It highlights how high rental costs are delaying many renters' ability to transition to homeownership. The analysis compares the time needed to save for a first-time buyer deposit across Britain for those living independently versus those staying with their parents and saving the equivalent of rental costs.
Government figures show that the average first-time buyer property price now stands at £245,208, requiring a 15% deposit of £36,781. This figure has risen by 35% in the past eight years, alongside a similar 34% increase in average monthly rental costs, which have reached £1,307.
Despite earnings also rising by 35% during this period, renters face significant financial strain, spending around 41% of their gross monthly income - or 50% of their net income - on rent. The research found that renters saving 20% of their net income would take approximately seven years to accumulate the necessary deposit.
In contrast, those living with their parents and saving the equivalent of monthly rent could reach the same goal in just 32 months, saving over four years in the process.
“Traditionally, the rental market has acted as the stepping stone to homeownership for the vast majority, but with both house prices and rents climbing at a phenomenal rate, many renters are now finding that they simply can’t make the jump,” a spokesperson for Alexander Hall said.
“Lenders understand how difficult it is to save for a deposit and we are now seeing some really good innovation at low deposit levels, such as Accord’s £5,000 deposit option and Skipton’s Track record 0% deposit mortgage for those who are renting.”
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