New research from Alexander Hall suggests first-time buyers could own their first home four years sooner if they moved in with their mum and dad.
To conduct the research, which was published today, the award-winning mortgage adviser examined the time required to save for the average first-time buyer deposit across Britain based on saving 20% of their net income whilst renting. In addition, experts looked at this against saving the average monthly cost of renting whilst living at home with mum and dad.
According to the latest government data, the average cost of a property for a first-time buyer is £245,208. This means that to secure the first foot on the ladder, buyers need to stump at a 15% deposit to the tune of £36,781 – a sum that has increased by 35% over the last eight years.
Against this backdrop, the rising cost of rent is also acting as a barrier for first-time buyers. During the same time period, the cost of rent has risen by 34% to £1,307 and the average renter pays 41% of their gross monthly earnings in rent – climbing to 50% of their monthly net income.
‘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,’ Stephanie Daley, director of partnerships at Alexander Hall, said.
‘Not only is the task of saving a mortgage deposit a sizable one, but when combined with the high cost of renting, it can prove impossible.’
With this in mind, the research from Alexander hall shows it would take the average renter 85 months to save the £36,781 needed to place a deposit on their first home when saving 20% of their income each month.
However, had the same renter checked into the hotel of mum and dad, they could have accumulated the same mortgage deposit in 32 months.
Stephanie continued: ‘So whilst living with your parents at a more mature age may not be ideal, it will likely mean you can get on the property ladder earlier.
‘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 Accords £5,000 deposit option and Skipton’s Track record 0% mortgage for those who are renting. Plus a number of lenders are now offering stretched income multiples to help first time buyers get the borrowing they need.’
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