Mortgages: 60% of renters can’t afford to buy a home

Posted on August 7th, 2013 | Categories - News

iStock_000001437287_ExtraSmallDespite various government initiatives, such as the Funding for Lending and New Buy schemes, new research has confirmed renters are finding it increasingly hard to get onto the housing ladder.

The figures from the estate agent, Right Move, show the number of people ‘trapped’ in rented accommodation has reached the highest level for over two years.

The study of 3,000 people found:

  • 60% of renters said they could not afford to buy a home
  • Only 15% of people surveyed said they were on track to save a large enough deposit to buy a home
  • Around a third of those people ‘trapped’ in the rental sector had previously owned their own home

Miles Shipside, director at Rightmove, said: “Even though some agents are reporting an increase in those buying and escaping the rental trap, the growing number of new households and former home owners returned to the rental sector keeps producing new tenants.”
He continued: “In spite of buying looking increasingly attractive as the costs of renting continue to rise, saving a deposit continues to get harder.”

House price rises

The news will come as a shock, particularly in light of recent figures which have shown an increase in the level of mortgage lending, particularly to first time buyers.

There will also be concern amongst renters, that recent house price rises will make it even harder for them to buy a home.

The main house price surveys, from the Halifax, Nationwide and the Land Registry have shown rises in house prices over the past few months. Indeed the Nationwide reported last week that prices have leapt by 3.9% over the past 12 months.

If the house price rises were to continue at the current rate, as many experts are predicting they will do, tenants are likely to find it even harder to build up a large enough deposit to buy a home and will have to hope that schemes such as Help to Buy come to their aid.