A recent report reveals that the process of accumulating a down payment for a mortgage has stretched to approximately a decade for many individuals.
Article: Struggling to Save for a Mortgage Deposit: A Decade of Challenges
A new study conducted by the campaign group Generation Rent has shed light on the challenges faced by renters in saving for a mortgage deposit. The research, which used government data on rents, house prices, and salaries, reveals that the struggle to save for a deposit has worsened over the past decade.
According to the findings, the average time it takes to save for a mortgage deposit in England has increased from 6.8 years in 2012 to 9.6 years in 2023. In the North East, it takes around 4.6 years, the same as a decade ago, while Londoners face the longest average time, at 18.3 years.
The increase in house prices and rents is a significant factor in the extended time it takes to save for a deposit. For instance, in 2012, the average ten percent deposit for first-time buyers was £14,745, and now it is worth £25,320. The average first-time buyer home price in England increased by 72% between 2012 and 2023, to £253,202.
Meanwhile, the median one-bed rent across England rose from £495 a month in 2012 to £725 in 2021. In London, it stands at £1,225. For Londoners, it would take close to two decades to save for a mortgage deposit even with sharing a home, while the average time would be reduced to 14 years if the buyer lived in a shared home for the entire saving period.
The typical national median renter could save £2,177 per year in 2012, which rose to £2,630 per year in 2022-23, a rise of 21%. However, this increase in the median post-tax salary only partially offsets the rise in the median one-bed rent and the average first-time buyer home price.
Ben Twomey, director of Generation Rent, stated that the struggle to save for a mortgage deposit has worsened in the past decade. He emphasised that in much of the country, the typical worker faces at least a decade living and saving in the private rented sector before they have a mortgage deposit.
The Renters Reform Bill, which includes measures to stop landlords evicting tenants without a valid reason, drive out criminal landlords, and improve the quality of private rented homes, offers some hope for renters. However, it is clear that more needs to be done to make home ownership more accessible for those currently renting.
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