Two hands against a white background, one handing a door key to the other

Categories: prs | tenants

Over 1 million prospective first time buyers cannot afford to buy a home, meaning the demand for rental property could snowball further.

Throughout this year, the private rental sector has seen a growing demand for rental property, as pressure has been placed on landlords causing the number of available properties to contract.

A new survey from Aviva underlines the mounting crisis in the need to house the nation. It reports that the cost of living crisis and inflation has widened the gap between those looking to buy and the ability to buy, to the tune of over 1 million people, across all ages surveyed and all parts of the country.

First time buyer survey

The data was generated from a survey focussing on those aged under 45 years old, who have never owned a property.

  • 46% said they were not currently house-hunting but intended to in future
  • 16% said they had no intention to house-hunt

One in five of those saying they would not be house-hunting, cited the cost of living crisis and inflation as the barriers to them being able to afford to buy their own home.

Expectation of property costs

What worsens the outlook for those hoping to own a home, is that their estimate of the cost of ownership was found to be inaccurate and far less than the reality.

Those surveyed expected:

  • The cost of buying a property to be £196,700 on average
  • The deposit they needed to raise to be £25,210
  • Monthly mortgage costs would therefore be £718.60

However, the numbers were put into a typical high street mortgage calculator and of the available mortgages:

  • A 2 year fixed rate deal equated to a monthly payment of £1,103.86
  • A 2 year base rate tracker equated to £928.07

This means the expected costs were underestimated by up to 54%.

Bank of Mum, Dad and Grandparents needed for investment

As has long been the case, turning to family to help buy property is a key requirement for achieving the goal of a first time buyer:

12% expect to receive a gift or loan from parents

4% expect to receive a gift or loan from grandparents

The younger the person, the higher the expectation is that help from immediate family will be essential.

What does this mean for landlords?

The latest English Housing Survey demonstrates that, after home ownership, the next largest housing tenure in England is private renters. So, naturally, the next option for those failing to achieve the funds for buying property is to go into private rented accommodation. Failing that those living at home would likely have to remain in that position.

As a result it is logical to expect the demand for private rented housing to be further fuelled by an increase in demand, at a time when landlords are crying out for greater support and a change in the political sentiment towards the sector.