New research from mortgage adviser Alexander Hall has shown that first-time buyers could significantly shorten the time required to save for a deposit by living at home with parents instead of renting. The findings reveal that avoiding rental costs could help buyers get on the property ladder nearly four and a half years earlier.
The average first-time buyer house price in Britain is currently £245,208, requiring a 15% deposit of £36,781. Over the past eight years, the cost of this deposit has risen by 35%, while average rents have also climbed 34% to £1,307 per month. Despite a similar increase in earnings (35%), renters often spend 41% of their gross income—or 50% of their net income—on rent, making saving for homeownership a daunting challenge.
Analysis by Alexander Hall found that renters saving 20% of their net income would take approximately 85 months, or just over seven years, to accumulate the necessary deposit. By comparison, those living with parents and saving the equivalent of the average monthly rent could save the deposit in just 32 months—less than three years.
Stephanie Daley, director of partnerships at Alexander Hall, said: “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.
“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.
“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 Accord’s £5,000 deposit option and Skipton’s Track Record 0% deposit 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.”
The findings highlight the growing challenges faced by renters in saving for homeownership while pointing to alternative strategies and innovative lending products as potential solutions.
