Fewer renters aim for homeownership amid rising costs

A growing number of renters are turning away from the dream of homeownership, with 28% expressing no interest in buying a property, the highest level this year, according to Barclays Property Insights.

It says that financial pressures are taking their toll, as only 17% of renters saved for a house deposit in July, down from 31% in January.

The cost of renting is a major hurdle, consuming 30.8% of tenants’ income compared to 26.6% for homeowners’ mortgage payments.

With renters earning an average of £23,562 annually, far below homeowners’ £37,775, saving for a deposit is increasingly difficult.

Harder to save

The bank’s head of mortgages, Jatin Patel, said: “Many people dream to one day own a home, but our latest findings highlight how renters are finding it ever harder to save for a deposit while keeping up with rising costs.

“More positively though, we’re still seeing savers create strong habits, and consider carefully the balance between getting into the market quickly with a lower deposit or trying to minimise monthly repayments in the longer term.”

Among those still aiming to buy, saving strategies include reducing non-essential spending (14%), skipping holidays (11%), or pursuing side hustles (8%).

To make homes affordable, 45% prioritise saving larger deposits to lower future mortgage costs, while only 12% would opt for a smaller deposit and higher borrowing.

A third (34%) would choose a smaller property to borrow less, and 16% would use all their savings to buy, rising to 20% among millennials.

Renters cut back

Barclays also says that a quarter of renters (26%) struggle to afford their rent, compared to 15% of homeowners with mortgages.

That leads 45% of tenants to cut back on other expenses to make ends meet.

Nearly two-thirds (62%) of renters have faced or expect rent increases this year, squeezing their ability to save.

Only 12% believe homeownership is achievable within a year, and 16% within five years, down from 19% in June.

House prices now surpass deposits as the top barrier to buying, cited by 38% of renters compared to 35% for deposits.

Also, 37% cannot afford to buy in their preferred area, further eroding homebuying motivation.

Landlord investment is crucial

Megan Eighteen, the president of ARLA Propertymark, said: “In certain regions across the nation, rent levels have shot up to unsustainable levels, and many tenants will be finding that their finances are really being pushed to the limit.

“Alongside this, the average deposit to purchase a home is around £70,000, so to pay heightened rent, as well as save for a deposit, will be nearly impossible for some.

“Additional support needs to be provided to first-time buyers in order to help them step onto the housing ladder, and the major concern in the private rented sector, which is causing rent levels to rise, is the ever-widening gap between supply and demand levels.”

She added: “Continued regulatory and financial pressure placed on landlords is pushing some out of the market completely at a time when homes are desperately needed.

“Investment from reputable and professional landlords is crucial as the private rented sector plays a key role in housing the nation, and this can only be done with the understanding and support of all governments across the UK.”

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