Where are the fastest and slowest places millennials can get on the property ladder with HTB?

The latest research by Compare My Move has revealed how long it takes young renters in 50 British towns and cities to save a deposit for their first home.

Related topics:  Property
Warren Lewis
14th November 2018
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According to the data, the average British renter can save enough for the 5% deposit needed for the Help to Buy Equity Loan in only 12 months, compared to the 3 years it would take to save for a 15% deposit.

Compare My Move found that renters in only 14 of the largest cities and towns in Britain can save up for a 5% deposit in under a year - with Oxford being worst: Over 5 years of saving for a 5% deposit, 17 years for a 15% deposit.

Burnley came out on top: Savers in Burnley can get together a 5% deposit in only 7 months.

Young renters in London, Reading, and Cambridge take more than a decade to save up a 15% deposit on their first home. London renters can trim off 7 years of saving through the Help to Buy scheme, as it takes the average millennials 3 years and 7 months to save up a 5% deposit.

Compare My Move wanted to explore the journey of young savers renting in the city or town in which they are looking to buy a home. Living costs used in this research reflect savers leading a normal life, which include necessities such as food and transport, but also socialising. When the average young renter in Oxford would take 17 years to save for a 15% deposit on their first home, the importance of the Help to Buy scheme to many young savers becomes apparent.

The worst cities for generation rent

Generation Rent have a hard time in the worst 10 cities for saving for a deposit for their first home. High rent prices and living costs, matched with higher-than average house prices make for a long wait for savers on the average regional wage.

The research demonstrates the difficulty in millennial renters in getting together a deposit for a home. In the bottom spot is Oxford, where millennial first time buyers would take 17 years to save up the £53,000 needed for a 15% deposit. In that time, they’d have to pay £115k in rent. Oxford first time buyers looking to use the Help to Buy scheme would still need to save a 5% deposit over 5 years and 8 months.

In London, the higher annual salary helps discount the high rent and living costs, but the sheer expense of houses in the capital means that renters will take more than a decade to save the £63k needed for a 15% deposit. With London Help to Buy Scheme, savers can get to the £21k needed for the average 5% deposit in 3 years and 7 months, though in that time will pay more than £26k in rent.

Help to Buy in under a year

There are 14 towns and cities in Britain where the average first time buyer can save enough to get on the property ladder in under a year through the Help to Buy scheme. In Burnley, the average first time buyer can save a 5% deposit in 7 months, on account of the low house prices and rent costs.

First time buyers in Burnley can save up the £10,436 needed for a 15% deposit in 1 year and 9 months. This means that with Help to Buy savers get on the ladder 1 year and 2 months faster.

Next is Dundee in Scotland and Hull in Yorkshire, where renters can save for a 5% deposit in 8 and 9 months respectively. Millennial renters in Sunderland, Blackpool, Liverpool and Glasgow can save up a 5% deposit in 10 months.

A race against rent for First time buyers

The research highlights the struggle of a generation trapped in a cycle of renting, hoping to move into their first home. The average UK first time buyer will have spent £11,456 on rent in the time it takes to save up a 15% deposit of £17k.

The situation is particularly harsh in areas with high rents as proportions of income. Londoners saving for an average 5% deposit of £21k will pay £26k on rent over the same period. A millennial spending the decade needed to save the £63k of a 15% deposit will have spent £77k on rent in this time.

In Oxford, over the 5 years and 8 months needed to save the £17,702 for a 5% deposit, the saver would spend £38,420 on rent. If saving for a 15% deposit to the tune of £53k over 17 years, a saver would pay an eye-watering £115,260 in rent. By opting to save for a 5% deposit instead of a 15% deposit, renters in Oxford and Cambridge save £38k and £31k respectively in rent costs.

The research highlights how high rent costs in certain cities and towns eat into the amount renters can save every month, prolonging the whole saving process.

Dave Sayce, Compare My Move Co-Founder said: “Our research shines a light on the struggle many young renters face in getting together a deposit for their first home.

In many cities it’s a race against rent to save a deposit as a prospective first time buyer. In cities and towns where rent greatly outstrips the national average, it can take more than a decade for renters in their 20’s to save up a 15% deposit.

It’s clear from our research that the Help to Buy scheme acts as an important catalyst for getting renters on the property ladder, and its extension to 2023 in the recent budget will act as a lifeline to generation rent."

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