Homebuyers still need the PRS as many struggle to save

Homebuyers still need the PRS as many struggle to save

0:01 AM, 14th December 2022, About A year ago

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Tenants who want to buy a home are having to rely on the Private Rented Sector (PRS) for longer, but this will put pressure on the supply of homes and push up rents, one bank says.

Paragon has surveyed more than 2,000 would-be homebuyers and found that the cost-of-living crisis is hampering their efforts to purchase a home.

And that means they have to rent for longer which, in turn, means there are fewer homes for rent and the demand will lead to higher rents.

PRS tenants say they are currently saving

The bank’s survey found that 35% of tenants say they are currently saving so they can buy a home and, of those, 73% are saving for a deposit.

But with bills rising, 56% say they are ‘slightly confident’ or ‘not confident’ that they will be able to generate the spare cash to save.

As a result, 40% of renters say they will be able to get a deposit together in the next year or two, but 44% of those who say they aren’t confident about saving enough fear their hopes to buy a home will take between three to five years.

The survey also reveals that 28% of tenants who are confident about raising a deposit say they will do so within the next year.

‘The pressure placed on household finances’

Richard Rowntree, Paragon’s managing director for mortgages, said: “Our latest tenant research confirms the logical expectation that the pressure placed on household finances will limit the capacity for some people to save for the deposits necessary to buy their own home.”

He says that this will see most tenants in the PRS having to rent for longer because the cost-of-living crisis means they can’t save enough for a deposit and to secure a mortgage.

Mr Rowntree said: “In turn, this will place further pressure on the supply of rented homes which is already surpassed by demand, exacerbating rising rents and limiting choice for tenants.”

The bank’s survey also found that 37% of buyers are looking to save a 10% deposit, which is the most common size, with 23% of tenants saying they have already saved this, while 4% are in the process of buying a home.


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