Increasingly, the younger generation are struggling to get a foot on the housing ladder, the average age of first time buyers is now 33 and 26% of them are having to borrow from their parents to buy their first property.
The biggest reason is simply one of economics. Depending on the type of mortgage you go for, a 5% to 20% deposit will be required. In real terms, that is a minimum of £10,000 on a £200,000 property. Saving is increasingly difficult, as wages do not account for the speed with which the cost of living is rising. Not only does the deposit itself need to be taken into account when saving for a home, there are mortgage fees and stamp duty to add in too.
There is help out there for first time buyers however, the governments’ help to buy Equity Loan Scheme is available to those wanting to buy a ‘New Build’ property. Under this scheme, 20% of the purchase price can be borrowed interest free for the first 5 years, but buyers must still have at least 5% deposit. There is also the Help to Buy ISA, where the government will top up your savings by 25% (up to £3,000). To be eligible for this the home you buy must;
- have a purchase price of up to £250,000 (or up to £450,000 in London)
- be the only home you own
- be where you intend to live
It therefore comes as no surprise that for many, private renting is a much more affordable option. According to government statistics , the private rented sector has almost doubled in size in the last 15 years, from 10% in 2002 to 19% in 2014-15. That equates to an increase of 900,000 more families renting their home over the last 15 years.