More than a third of self-employed renters don't think they'll ever buy a home

Rozi Jones
19th July 2021
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"52% of the self employed workers in the UK have seasonal or extremely variable income streams month to month, which may not fit the tick-box approach of many high street lenders"

Self employed workers in the UK are pessimistic about their home buying chances, with the pandemic exacerbating this sentiment, according to research from Aldermore Bank.

One in five (20%) self employed renters say they are more motivated to buy due to the lockdown experience and 25% are currently actively saving for a deposit.

However, many now believe that conditions for buying as a self employed worker have worsened. Over a quarter (28%) say saving up for a deposit is more of a challenge now due to the financial impact of the pandemic and one in five (18%) have delayed their home buying timeline due to the pandemic.

Despite 27% of self employed renters now seeking to improve their credit to boost their home buying chances, 14% say their credit score has been negatively impacted due to the pandemic. These increased challenges have meant over a third (36%) of self employed renters say they feel buying a home is unobtainable for them right now.

While four in five (78%) self employed Brits believe owning a home is an important life step, nearly half (44%) think the home buying process is confusing.

Furthermore, over half (56%) think mortgage lenders do not do enough to support the self-employed. With only 14% of self employed workers having consistent income month to month, many feel high street lenders do not give them a fair hearing when going through the application process. The number one reason for a mortgage application rejection for the self employed was being self-employed, with a third (32%) citing this as a reason for a rejection.

Only a third (29%) of self employed home owners believe mortgage lenders fully understood their earning capabilities when they applied, with half thinking their lender only understood to a degree and nearly a quarter (21%) saying their mortgage lender did not understand their earning capabilities at all. This has led to two-thirds (64%) of the self employed believing mortgage lenders treat self employed people worse than those who are employed with a regular salary.

Jon Cooper, head of mortgage distribution at Aldermore, said: “The UK is an entrepreneurial nation, and the growing self employed workforce is integral to our economy, so it is disappointing to see persistent barriers for them when seeking to secure a mortgage, which appears to have been exacerbated by the pandemic.

“The self employed need not despair, however, as the growth of specialist lenders has opened up an increasing number of options that can provide pathways to home ownership. Our research shows 52% of the self employed workers in the UK have seasonal or extremely variable income streams month to month, which may not fit the tick-box approach of many high street lenders, but specialist lenders can dig into the detail to understand complicated income streams ensuring the self employed have opportunities to get on the housing ladder.”

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