Six million renters want to be first-time buyers

Up to six million tenants could be preparing to take their first step onto the property ladder as 29% of them have explored whether they can afford to buy a home in the past year.

According to Pegasus Insight, many tenants are now also saving for a deposit with those aged between 25 and 34 having the strongest desire to buy.

The firm’s latest Tenant Trends report also found that 43% of this age group have investigated affordability and 34% have begun searching for properties to purchase.

In Central London, the trend is even more pronounced, with 39% of tenants checking their financial options, 20% visiting potential homes and 21% consulting mortgage advisers.

Tenants want to buy

The firm’s founder and director, Mark Long, said: “Too often, tenants are seen as a captive audience for landlords rather than tomorrow’s first-time buyers.

“But the fact that nearly a third are actively researching mortgage affordability shows there is a sizeable group getting ready to transition into homeownership.

“With close to 20 million people living in the private rented sector, that equates to as many as six million potential new mortgage customers.”

He added: “For brokers and lenders, this is a clear signal: these are future borrowers who will need guidance, accessible products and support to bridge the gap between renting and buying.

“One of the most important steps the market can take is to evolve affordability assessments.”

Lenders should consider rent payments

Mr Long continued: “Many would-be buyers find themselves excluded, even if they have a proven track record of paying rent at levels equivalent to – or greater than – the mortgage they would be taking on.

“Innovative solutions that factor in rental payment histories are a good example of how to widen access.”

He adds: “With the FCA having recently relaxed its guidance on affordability, some lenders may judge this to be the right time to broaden their approach.

“Recognising consistent rental records could help ensure responsible tenants are not unfairly locked out of homeownership.

“With carefully designed solutions, advisers and lenders have a real opportunity to connect with this emerging pool of first-time buyers.”

Tenants will remain in the PRS

The survey also found that 51% of tenants express a desire to buy a property eventually, though intentions vary by age.

Among 18- to 34-year-olds, 68% aspire to own their home, compared to just 15% of renters over 55.

Meanwhile, 22% of tenants believe they will remain in the private rented sector for the foreseeable future.