A remarkable 96% of those currently in rented accommodation still ‘dream of owning a home someday’ and, despite ongoing issues of affordability, access to credit and difficulties raising a deposit, 70% say ‘they will never stop trying’ to make their dream a reality.
However, the survey of 3,000 renters revealed the number of 'trapped tenants' - people who want to buy but cannot afford to - has reached record highs.
Three in five (60%) of today's tenants are 'trapped', up from 56% a year ago. Worryingly, more than three in ten trapped tenants are 'regressive renters', people who have previously owned their own home.
It is hoped the government's Help to Buy scheme, which widens from just new build property to include all existing homes under £600,000 in January 2014, will offer hope to disillusioned renters.
The survey found that only 15% of potential buyers were on course to save the required 5% deposit.
Miles Shipside, Rightmove director and housing market analyst, said:
"In spite of buying looking increasingly attractive as the costs of renting continue to rise, saving a deposit continues to get harder. For many of those trapped in rented accommodation and dreaming of escape, it's a nightmare scenario."
The traditional British love affair with property ownership seems as strong as ever and today’s tenants are so committed to realising their dream of homeownership that most say they’ll never concede defeat. The tricky years since the run on Northern Rock have not deterred them – in fact, they may feel encouraged by a more confident and optimistic mood in the market after years of famine and frustration. Today’s tenants are certainly hungry to be paying off their own mortgage rather than their landlord’s”.
The Help to Buy scheme, which widens from just new build property to include all existing homes under £600,000 in January 2014, offers hope to those with just 5% deposit. However, Rightmove’s latest research also shows that just 15% of potential buyers state their deposit saving goal ‘is on course’, raising the prospect of a substantial majority missing out on the proposed three year window of the scheme.
Shipside adds:
“For those dreaming of owning their own home, Help to Buy could perhaps play the role of dream-maker. While it’s tough to save, especially when you’re paying rent and it’s rising, the window for homeownership will be flung open again. It will not be a pre-credit-crunch free for all, but for some that have been unable to reach the higher deposit criteria, it could be a real leg up onto the property ladder”.
Rightmove’s research also shows record levels of ‘trapped renters’ – tenants who would like to buy but can’t afford to – has risen from 56% a year ago to 60%. While lettings agents increasingly report ‘property purchase’ as the reason tenants give for serving notice, the pipeline of new tenants and the existing trapped renters who cannot ‘escape to buy’ means that a higher proportion are trapped. More than three in ten (31%) of today’s trapped renters actually owned previously - yesterday’s homeowners but today’s ‘regressive renters’.
Shipside observes:
“Even though some agents are reporting an increase in those buying and escaping the rental trap, the growing number of new households and former homeowners returned to the rental sector keeps producing new tenants. In spite of buying looking increasingly attractive as the costs of renting continue to rise, saving a deposit continues to get harder. For many of those trapped in rented accommodation and dreaming of escape, it’s a nightmare scenario.”
Brian Murphy, head of lending at Mortgage Advice Bureau (MAB), comments:
“The fact the typical homebuyer’s income recently rose above £40,000 for the first time helps to explain why so many renters feel trapped and unable to afford a home. But anyone clinging to their dream of buying a house will find that help is increasingly close at hand.
A rush of lender offers and government initiatives mean that buyers might be surprised by some of the options now open to them. Adverse credit is becoming less of a barrier than it has been since the market crash, and there are alternatives out there for buyers with poor credit histories or adverse circumstances – albeit limited – if they want to get a mortgage.
Part two of the Help to Buy scheme is designed specifically to channel loans to buyers who are struggling to raise a deposit, so today’s renters are absolutely right to hang onto their homeowning ambitions.”
