Lockdown has strengthened homeownership dreams for 1 in 4 renters

Property Reporter
11th February 2021
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Despite the usual challenges of saving for a deposit and high rental costs being further compounded by the pandemic, new research from Aldermore has revealed that almost half of the UK's renters have not given up on their dream of being a homeowner.

According to the response from Aldermore's latest survey of 2,000 UK private renters, 45% say owning a home is a life goal of theirs, with 26% actively saving for a deposit currently, with the greatest intentions being among renters in Northern Ireland, Greater London, and the South East.

Furthermore, the experience of the pandemic and lockdown among renters has strengthened homeownership ambitions, with 26% saying lockdown has made them more motivated to buy their own home.

Credit concerns looming over renters

Despite being motivated to buy, realising the dream of homeownership is proving difficult. The biggest obstacle for homeownership according to renters is raising a deposit (30%), affordable house prices (17%) and high rent costs (13%).

With nearly half of prospective first-time buyers being rejected for a mortgage, it is understandable that one in ten renters see securing a mortgage (8%) as their biggest obstacle.

28% of private renters say credit history is a big concern, with 38% looking to actively improve their credit score to increase their chances of securing a mortgage.

The main credit issues of private renters include having an overdraft (26%), credit card debt (25%), gaps in employment (21%), responsible for dependants (17%), and missed bill payments (15%). There is also a noteworthy proportion that has more significant credit issues with one in twelve (8%) having an account handled by collection agencies, 7% have taken out a payday loan, and 5% having a County Court Judgement (CCJs) in their past.

Covid-19 presents new challenges to homeownership

The Covid-19 pandemic has also presented a financial challenge for renters across the UK, as one in five (22%) renters have been placed on furlough or lost employment since the outbreak. Financial struggles are evident as more than one in 10 (12%) have missed or been late on rent payments this year, and 14% say they have had to dip into their savings to get by day-to-day.

The average rent in the UK among those surveyed was £648 a month, with the highest rents in Greater London (£926), South East (£740) and South West (£679), with 14% of private renters say they have experienced a rent increase since the Covid-19 outbreak in March.

Young renters have the highest motivation to buy

69% of 18 to 34-year-olds say owning a home is a life goal of theirs with a further 45% citing that the lockdown period has made them more motivated to achieve this goal. Furthermore, 24% have missed or been late on rent payments this year, 49% of Millennials and Generation Z are taking measures to improve their credit rating.

Jon Cooper, head of mortgage distribution, Aldermore, comments: “The experience of lockdown has focused renters’ minds to work towards owning a home more than ever before, but it is clear from the data that renters see credit issues in their past as a problem for them. And with many dealing with furlough and reduced incomes recently, it is understandable they may feel the dream of homeownership is far from reach.

“However, the challenges they face are not as large a barrier to buying a home as it may have been in the past. Specialist lenders, like Aldermore, consider borrowers with credit issues, including debt and CCJs, alongside those experiencing furlough, so options are open as we begin the new year for renters that previously may have been turned away from high street lenders.”

Kevin Roberts, Director, Legal & General Mortgage Club, adds: “The coronavirus crisis has undoubtedly presented different challenges for people wishing to move onto and up the property ladder. Those with homeownership aspirations still have many mortgage options available to them and should not feel locked out of the market because of previous credit marks, or existing debts. The key to success for these people is to seek professional mortgage advice. Working with an independent mortgage adviser can be especially useful to aspiring mortgage borrowers, helping them understand their full range of options, such as specialist lenders like Aldermore.”

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