Ability to save for a deposit influences the amount of time tenants believe they will continue renting
Many of those who want to buy their own house feel that the current cost-of-living crisis could affect their ability to afford a property purchase, thus extending their stay on privately rented properties, research from Paragon Bank has found.
A survey of over 2,000 people who currently live in privately rented homes revealed that just over one third (35%) are actively saving to buy a property, with the majority (73%) in the process of saving for a deposit.
When asked to consider the impact of the cost-of-living crisis, over half of these aspiring homebuyers (56%) expressed reduced optimism in their capacity to save for a deposit, either responding that they are only slightly confident or not confident at all.
Paragon noted that the ability to save for a deposit appears to influence the amount of time tenants anticipate remaining in their rented home.
Around four in 10 of those who feel it is unlikely that their saving will be impeded predict being ready to purchase their own house in the next one to two years, whereas a similar proportion of those who are not confident in raising the funds for a deposit expect to buy a home within three to five years.
Over a quarter, or 28%, of those who are confident in their deposit raising ability expect to buy a home within the next six to 12 months, with the proportion falling to one in 10 among those who feel their capability will be compromised.
“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,” Richard Rowntree (pictured), managing director for mortgages at Paragon Bank, commented.
“This has implications for the private rented sector because a sizeable proportion of these aspirational homebuyers will remain in rented properties for longer while they battle the rising cost-of-living to put aside funds needed to secure a mortgage. 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.
“This helps to reinforce my view that different housing tenures are inextricably linked, with the population moving between them influenced by their needs at the time. As a result, each tenure should be viewed equally, and policy should reflect this to minimise any barriers to much needed investment.”
