New research from Rightmove suggests that only two in five renters who would like to buy but cannot afford to do so are currently actively saving for the deposit needed to get them onto the housing ladder.
Of the 58 per cent that have not yet started saving for a deposit, two in five have not even set a date to start.
While a third of 'trapped renters' say that getting on to the property ladder is their number one priority, nearly a quarter are most concerned with ‘living in a desirable area’, starting/growing a family (11 per cent) and getting married (9 per cent). Around 16 per cent say that their priority is ensuring money ‘for leisure time’ and another 8 per cent that they are able to take regular holidays.
“More than half of tenants would like to buy but cannot afford to," said Miles Shipside, Rightmove director and housing market analyst, "yet over half of these have not yet begun their deposit-saving- plan to escape ‘Generation Rent’. Home-ownership must seem so far away that many find themselves in a hopeless situation.
"Tenants have been hit pretty hard in the last few years as a shortage of rental supply has left tenants facing the double-whammy of paying more rent while also hampering their ability to save for a deposit. On average, the monthly rent accounts for 37 per cent of tenants’ take-home pay and even those that are able to save anything at all are only saving 11 per cent of what they bring in each month.”
There are significant regional differences when it comes to who has started saving for a deposit - 56 per cent in London and in East Anglia say they are actively saving compared to 30 per cent in the East Midlands and 28 per cent in Wales.
When asked to evaluate how their saving efforts were going, only one in twelve current savers felt they were ‘on course’ to meet their target deposit. Another 40 per cent said that while they could only afford to save a little each month they would ‘get there eventually’. A further 39% said that they would ‘need a windfall’ in order to reach their goal.
“Demanding deposit hurdles have made the transition from tenant to first-time buyer challenging for many in recent years," said Shipside. "Those who expect to make that move this year tell us that they’ve been working towards a deposit goal of £20,000, rising to £30,000 for those in London, figures that must seem daunting to even the most frugal tenant. Even for those who’ve been diligently saving, many are still left hoping that their lottery numbers come up or the Bank of Mum and Dad proves less picky with its lending than the High Street banks. However, the Government’s proposed new Help to Buy scheme could yet prove to be a ‘virtual windfall’ by lowering the deposit hurdle to 5%, providing much-needed assistance and motivation for Generation Rent.”