The latest research from award-winning mortgage adviser Alexander Hall reveals that first-time buyers could get onto the property ladder nearly four and a half years sooner if they were to rely on the support of the ‘Hotel of Mum and Dad’, rather than struggling on their own in the rental market.
The analysis looked at how long it would take the average first-time buyer to save for a house deposit across Britain, comparing two scenarios: one where renters save 20% of their monthly net income while renting, and another where they save the equivalent of their rent while living at home with parents.
The average first-time buyer house price in the UK is currently £245,208, meaning a deposit of 15%, or £36,781, is required to secure a property.
This deposit has risen by 35% over the last eight years. Meanwhile, the cost of renting has climbed by 34% to £1,307 per month, leaving renters paying a significant portion of their income in rent.
The average renter now spends 41% of their gross monthly income on rent, which increases to 50% when looking at net income.
Stephanie Daley, Director of Partnerships at Alexander Hall, explained, “Traditionally, renting has acted as the stepping stone to homeownership. But with rising house prices and rents, many renters are now struggling to make the jump. Saving for a deposit while paying high rents can seem impossible, and while living with your parents as an adult may not be ideal for everyone, it can certainly speed up the process of getting onto the property ladder.”
How long would renters take to save for a deposit?
The research shows that it would take the average renter 85 months, or just over seven years, to save up the £36,781 needed for a deposit, assuming they could set aside 20% of their net income each month.
However, had the same renter lived with their parents and saved the amount they would have spent on rent, they could have accumulated the same deposit in just 32 months — under three years.
This means they could have secured their first property 4.4 years sooner than if they had been renting.
While living with parents may not be for everyone, there are other innovative mortgage solutions aimed at helping renters break into the property market.
Daley added, “Lenders are aware of the difficulties renters face when it comes to saving for a deposit, which is why we’re now seeing creative solutions like Accords £5,000 deposit option and Skipton’s 0% deposit mortgage for renters. Many lenders are also offering more flexible income multiples to help first-time buyers get the borrowing they need.”
With the pressure on renters and first-time buyers only increasing, this research highlights the growing importance of finding alternative ways to save for a deposit, and shows how the support of family can make a significant difference in accelerating the journey to homeownership.