Nearly 40% of tenants who are trying to escape being part of today’s ‘Generation Rent’ could become home-buyers when the 95% Help to Buy scheme is implemented in January.
The statistic emerges in research released this morning from Rightmove which found that very few ‘trapped renters’ – defined as tenants who would like to buy but can’t afford to – are currently saving for a deposit.
Two in five (39%) of those feel they will never get there unless they have a stroke of luck – which Rightmove says could come in the form of the Help to Buy scheme, which will enable people with only a 5% deposit to get on the housing ladder.
The research, among 3,214 current tenants, shows that while 42% of ‘trapped renters’ are currently actively saving for a deposit, only one in 12 are on course to meet their deposit goal – and the majority have not begun to save.
The reason is simple: rent accounts for 37% of take-home pay on average, and for at least 50% of take-home pay for 27% of tenants.
According to the Rightmove survey, nearly six in ten (58%) current tenants feel ‘trapped’ into rental lifestyles. Of those who are currently saving towards deposits, the average savings represent just 11% of take-home pay.
When asked to evaluate how their saving efforts were going, only one in 12 (8%) current savers stated they were ‘on course’ to meet their target deposit, while 40% said they could only afford to save a little each month but would ‘get there eventually’.
A further 39% said that as they weren’t able to put enough away, they would ‘need a windfall’ in order to reach their goal.
Rightmove said that its findings “underscore the need for assistance to overcome lenders’ deposit hurdles, something that the Government’s new Help to Buy scheme appears to offer”.
Rightmove director Miles Shipside said: “Demanding deposit hurdles have made the transition from tenant to first-time buyer challenging for many in recent years.
“Those who expect to make that move this year tell us that they’ve been working towards a deposit goal of £20,000, rising to £30,000 for those in London – figures that must seem daunting to even the most frugal tenant.
“Even for those who’ve been diligently saving, many are still left hoping that their lottery numbers come up or the Bank of Mum and Dad proves less picky with its lending than the High Street banks.
“However, the Government’s proposed new Help to Buy scheme could yet prove to be a ‘virtual windfall’ by lowering the deposit hurdle to 5%, providing much-needed assistance and motivation for Generation Rent.”
According to the Rightmove survey, one-third of all trapped renters said that getting on the home ownership ladder is a priority.
The survey was completed last month, between April 9 and April 25.
Help to Buy will introduce 95% mortgages on all housing stock – old and new – with the loans underwritten by a mortgage guarantee. The scheme is due to start next January 1.
Comments
Whacking on 10% because the maths is easy teehee
Sorry Rant you seem to share so many similar posts with so many other Property Price Rise Canutes.
The bit about having the cash to buy outright was a JonnyP post on Valentines day one year, returning to the UK came from 'You mark my words it happened in Japan Dave'
Possibly all the cutting and pasting from this that and the other site in the search of support for your stance leaves you without a clear understanding or identity.
I am off to make an offer on a place before PBK hypes the market too much and agents start whacking on 10% because the maths is easy.
"how many posting personalities have you got?"
Just the one. Believe it or not, there are others out there who also didn't get swept up in last decade's 'aren't high house prices wonderful darling' mentality.
"you are now posting using the Japan Dave story line."
Really? You've read that on this thread? Your eyes must be good...
how many posting personalities have you got? you are now posting using the Japan Dave story line.
Most of the old timers are still here, still watching, occasionally posting, but they don't engage with you because you know so much.
"since you have been posting here ,Dec 15 2011 it has cost you more to rent than own."
Forgot to ask how that works, given I have saved throughout that period, house prices around me have gone down, I've paid no building insurance or maintenance and the interest on my savings has paid most of my rent each month.
Take me through the maths, by all means, remembering that I haven't paid any interest on a mortgage throughout that period and my savings has reduced the amount of interest I would have to pay on a future (theoretical) mortgage too.
"when paid professionals are telling you time and time again you are wrong you might do well to listen."
Well I must have missed most of those posts...
I wonder what those paid professionals would have told me in 2008. I imagine it would have involved something along the lines of boats and not wanting to miss them.
Certainly when I first started posting on this site, there was a heck of a lot of 'can't go wrong with bricks and mortar, property prices only go up, double every seven years etc'. Many of those posters aren't around any more, strangely enough.
no-one is saying you should have bought in 2008 but since you have been posting here ,Dec 15 2011 it has cost you more to rent than own.
Picking figures out of the air? I am not I am using national averages rather than make it too personal.
You whole paranoia is based on what has happened to other less prudent buyers.
The very vast majority of people buy a property as a home that they can keep for as long as they want to stay there. Protecting them from the vagaries of a landlord giving notice.
Very few people see a spend- able profit and many downsize to help their offspring.
You keep on posting stuff that contradicts what most people on here are paid to understand. You will not win because you are wrong. We earn our living being paid by people to give sound advice on property and you will be hard pressed to find a case of an Estate Agent sued for getting it wrong.
Surveyors might mis value property but on the whole Agents are getting it right time and time again.
It is your money to do with what you like and you have a duty to look after it best you can but when paid professionals are telling you time and time again you are wrong you might do well to listen.
So if I rent I can't save money? I see you are demonstrating your lack of financial skills once again. You also seem to be pulling further figures from the air with relation to how much I've paid in rent and accrued in interest.
The interest on savings well north of six figures pays the majority of my rent. Of course I have no maintenance or building insurance to worry about either.
When I came back to the UK in early 2008 after nearly a decade away, the identical property next to the one I was renting was on for sale at £130k. We could have got a mortgage then, but knowing we wanted to start a family it would have been a challenge. I also thought UK property was in a huge bubble by that point.
The guy finally sold it for £104k two and a half years later. Now there are other (almost) identical properties on that street with asking prices under £100k.
Had I bought back in 2008, I would have lost a large chunk of my equity, with 20 more years of a mortgage to go. Instead, I can now buy one of those properties with cash. And you're trying to tell me I've made the wrong decision?
Paying a mortgage also involves considerable dead money in the form of interest given to the bank, a fact which many people conveniently ignore. I've paid off my mortgage before I even took it out, all before I'm 40. That means I don't need to rely on any inheritance. If it comes, of course I'm not going to refuse it, but I also don't have a financial plan that relies on it.
We should be fine for a bit; Loose Women, then Jeremy Kyle.
@James, oh no, you have done it now!!!!! It was a joke not an invite........................ His/Her little fingers will be cutting and pasting like mad.
If your firm is getting away with quoting gross yield, shame on your professional advice, it probably explains how come so many of your landlords are in negative equity. Next you will be claiming fixed costs are ignored when calculating profit.
As for you Rant, lets play the game your way when all us boomers die after selling our properties and dropping dead after 10 years in a care home is your generation going to refuse anything remaining bequested to you because it was gained through greedy exploitation of your generation? I have to say the view from your moral high ground must be fantastic. I don't think for 1 second of one day you have got the wherewithal to buy a property. It was someone else who posted that line on here and you have simply copied it as if it means something.
There is no way on god's earth anyone sensible would shell out £8400 a year in rent in order to earn £2900 in interest. Just concentrating on the past 3 years of your posting, you will have shelled out £25,200 in rent and earned £8700 in interest; it has cost you £16500 to protect yourself against a price crash which hasn't happened. (unless of course you are still living with the exploitative regime of your boomer parents)
Can you not understand how your principles and maths have no logic?
Brilliant, rants now posting to himself!!! Someone help the poor bloke out……………………..
That's a balanced post James. Maidstone is probably the closest in terms of commuting distance to London? Would you agree with the other poster that prices in the region are up over a third in the last three years?
"Local agents that I know well have told me that they cannot take property on quickly enough to meet demand and prices naturally are climbing in response."
The latter part of that comment can't be so straightforward though. That demand, in nearly all cases, needs to be given access to credit in order to be proceedable. Current trends on lending levels aren't totally clear.
"So do you hold off buying bread in case it is cheaper tomorrow?"
I would buy enough for today, because I need food to live. Ditto for shelter. I wouldn't seek to make a profit out of an essential living need though, that's for sure.
"So everyone who is mid forties up to 67 owns more than one property? and all are exploiting anyone under 45? "
Where have I said that?
"With all this unearned equity tied up in their homes at what point to boomers get to cash in their lot and enjoy spending all the cash?"
Many did a bloomin' good job with mortgage equity withdrawal last decade, taking cruises and buying sports cars. Some of today's ridiculous asking prices reflect a desire (and in some cases a need) to pass the bill for that on to others.
"When we all croak, who is going to benefit? the offspring of boomers perhaps. What do you suggest we do with our estates so that you lot are not unfairly adavantaged over the next generation?"
Care homes are free round your way then?
rantandrave, I work and live in the South East and can tell you that prices have risen significantly in the last 12 months.I work in Maidstone, Medway and Swale but live near Thanet.
We only deal with Landlords and have seen a significant number opting to sell. These are the Landlords who have been stuck with negative equity up until now or are finally able to see some capital appreciation and are jumping while they can.
Local agents that I know well have told me that they cannot take property on quickly enough to meet demand and prices naturally are climbing in response.
As I mentioned in my previous post the Help to Buy scheme is going to make this a whole lot worse.
That said I cannot believe that prices are going up again. Based on what exactly? A stuttering economy close to a triple dip, collapsed manufacturing industries and a city that has to compete with emerging economies for the service/financial sectors. As a tenant looking to buy I would be delighted to see the housing industry brought back down to a level that ties in with salaries.
I would also like to disagree with an earlier poster who suggested that yields are quoted net of voids and costs. They certainly aren't. An individual investor may choose to get a net figure but any agent/developer is quoting a headline gross yield.
The government's headache is a little more complex. London is seen as a friend to the wealthy and attracts the super rich from all over the world. During a recent stint with an international company It became clear that any hint of trouble sends the rich to a perceived safe haven. Last year saw many Greek and French citizens purchasing in London. This brings tax revenue and further investment to the construction industry. Were the government to allow these investments to collapse London and the UK will be screwed.
So do you hold off buying bread in case it is cheaper tomorrow?
So everyone who is mid forties up to 67 owns more than one property? and all are exploiting anyone under 45?
With all this unearned equity tied up in their homes at what point to boomers get to cash in their lot and enjoy spending all the cash?
When we all croak, who is going to benefit? the offspring of boomers perhaps. What do you suggest we do with our estates so that you lot are not unfairly adavantaged over the next generation?
Boomer - anyone currently in their mid 40s up to 67
Zoopla = the UK's second largest property portal (by a long way) focused on asking prices. Their sold price data has come in for considerable criticism, even on this site, for being way out and giving false expectations to vendors. It is a commercial source with a vested-interest.
Land Reg = least biased and most comprehensive source of property price data based on actual sold prices.
Take your pick which one you think is more reliable.
Barking on about how much property has risen in price over the years is hardly a groundbreaking point. Loaves of bread are a lot more expensive than they used to be too.
The property market moves in cycles, as we can both agree. Compared to all historical trends, it is currently close to the peaks of that cycle. Why would I want to buy in now, at this stage of the market? All I see is a property market that's showing some signs of life thanks to massive government stimulus, 300 year-low interest rates and an influx of funny money from abroad. None of that looks remotely sustainable to me.
Your peers have no doubt bought a home for their family when they were available for a much lower salary multiple than they go for today. The purchase has been a good decision for them. My peers include many stuck in negative equity, interest-only mortgages they can't pay the capital on and a lifestyle of two incomes needed to pay off a massive debt - all to gift your generation with equity you have done nothing to deserve and keep the bank bonuses flowing.
what is a boomer? give me a date range.
actually I don't read the daily mail I threw that into complete the stereotype you have of anyone who owns more than one property.
first of all you tell me figures i am achieving are not real despite me paying tax on them and now when I use your authoritive index against you all of a sudden land registry are making things up too?
You won't use Zoopla figures, you selectively use land registry figures, which price index do you use to fuel your paranoia?
What you are not grasping is that your figures are plucked out of thin air and so any theories you link to them are utterly meaningless.
You're a Daily Mail-reading Boomer who thinks property prices only go up. Not exactly breaking any new ground there...
What you are not grasping is when is the right time to buy and right time to sell. The Stock market is an example of another market you won't be understanding either. Daily movements on the right stock of 1 or 2 % don't get reported as 380% in a year but that is what is happening, that is how Investors and bankers are moving ahead of the game while interest rates are on the floor.
Before you started posting on here about the House price crash I and many others had already got out of properties bought up to 2006 and by 2009 were already buying them back again at pre 2008 prices. The 2008 crash had happened and was over. You can wait for the next crash which will happen and will be proved right but you will have missed a whole cycle where many folk will have doubled up their capital while you have been sitting there denying it is happening.
You have access to land registry figures, go back to the month of your birth and work out the percentage growth in property prices which will include probably 3 serious busts and unbelievable booms. Calculate the average monthly growth for your lifetime and you will be shown why you are not correct in being so fearful of a crash.
Lets guess you are 38, born 456 months ago, by my calculation the average property price was about 41 times lower than it is now; a compound monthly rise of 0.82 %, 10.3% average per year.
If you still think you are right carry on, I am happy to be wrong it is proving to be more lucrative.
It will take a lot of FTBs to make up for the foreign buyers if UK property goes out of fashion or the global market turns.
http://propertyspotter.blogspot.com/2013/05/are-foreign-buyers-easing-crisis-or.html
Land Registry - annual (not monthly) house price increases for South East:
April 2012 - Mar 2013 1.2%
April 2011 - April 2012 0.4%
April 2010 - April 2011 0.5%
Adjusted for inflation, that's a fall in real terms every year. So, as I said, you haven't got a clue what you're talking about. Game, set and match.
Sorry rant try Zoopla figures, go compare prices and you will find I am right.
As for my newspaper try the Daily Mail that is a far more moderate and unbiased read.
With all the foreign investors; China, Russia, Greece et all flooding into central London and paying top dollar, the ripple is one you can't keep up with.
Your cash compounding up at 0.15%net/month isn't even keeping up with HPI even if it is only 3% /year
"London and the South East have averaged over 1% per month for the past 36 months "
UTTER TOSH. Sorry, I'm not even going to bother to reply any more to somebody who is so out of touch with reality
As I said, someone who reads the Daily Express too much.
I expect that comment is going to earn you a pounding from all sides. If you had any credibility, it has just vanished. I'd quit posting now before you make an even greater fool out of yourself.
London and the South East have averaged over 1% per month for the past 36 months
As for the yield, you ought to be aware that anyone quoting yields will naturally be including any voids and ownership costs. The yield figure falls out of the back end of the accounts once everything is tallied up.
The bit I was questioning is the depreciating asset bit. You assume assets values are going to fall, that pushes yields up not down.
"If the net affect on the market is an average rise of 1% in a month
And where has that happened across the UK in the last 12 months. Specific answer please. Me thinks you've been reading the Daily Express too much.
"voids, capital depreciation. what are you banging on about?"
So you're another BTLer with a very basic grasp of the real costs involved? Do you really need that explaining??
voids, capital depreciation. what are you banging on about? when someone quotes a yield which averages higher than the national average do you think that is because they have a portfolio that is isolated from all those factors?
I can imagine how impressed your friend and their relative were at your staggering knowledge and wisdom.
If the net affect on the market is an average rise of 1% in a month (propped up, artificially inseminated or unassisted) and you are managing 3% gross out of a bank per annum how much is your capital depreciating?
£161000 X 0.03 X 0.06 = £2898 per year up
£161,000 X 1.01(power 12) -£161,000 = £20418 behind the market. By being so market cautious Rant you are costing yourself £17520 a year?
"The PRI is going to struggle no matter what you think, we are seeing a huge increase in the number of Landlords looking to exit their investments. Once prices start to increase after Jan 14, this will increase exponentially.
As a tenant that has just been served notice, it's going to be unstable times ahead."
Are you in London? If so, how are the changes to housing benefit affecting the market?
Sorry to learn that you're having to move out. I'll save the debate about tenants' rights in this country for another day.
So how does that investment yield benefit the economy long term exactly?
I have not missed the boat and neither will my kids others will not be so lucky you smug pr***
You are the type that would sell off your own mother.
"I can't see any incumbent government allowing the housing market to crash too badly"
If governments have the final say over whether prices in a property market crash or not, why didn't the Tories do anything during the early 90s? Corrections are under way in a number of other Western countries now, despite governments there trying to prevent exactly that.
Besides which, the idea that prices in the UK are stable is only true in the average statistics. Northern Ireland has had the biggest property price collapse anywhere on the planet this century. Government intervention has done diddly squat to support prices there. The slide in prices across much of northern England, the Midlands and Wales has been established for a while now - so the government has failed to support prices there too. Prices are up in London - that's not a result of the government's efforts though, but funny money from abroad seeking a safe haven. So, in conclusion, I see little evidence that the governemnt can do much other than kick the can down the road, hopefully until past the next election.
With regard to the other poster - as I've said on this forum before, I have the cash to buy a property right now. I choose not to because they currently represent such poor value. Show me a market where prices are rising not due to temporary props but rises in real wages and rises in employment, then I might consider buying.
Also talked to a relative of a friend who was all gaga about a 6% BTL yield. While he did have a mortgage, he hadn't factored in voids, maintenance, insurance and the costs invovled in buying the property. Throw in some capital depreciation and I reckon he was losing money. His choice though. Certainly there are bank accounts still out there paying more than 3% interest.
Do learn to read, 6% on unmortgaged property, Interest rates can do what they like. Up or down, if unmortgaged, the mortgage interest rate has no affect on the yield.
Russian Route (sic)? Average £8400 per property per year for doing nothing and keeping investment cash away from the banking industry. Offload now? Great Advice, sell up and go from 6% down to 2% unprotect all but a fraction of the cash and get out of a market that is recovering at 20% / annum.
Which financial institution do you work for?
An investment yield 12 times the lending rate is adding to the economy long term.
What you meant to say is Boo Hoo Hoo, I missed the boat and it's not fair!
RE "If you think taking 6% average yield on unmortgaged property is sucidal I can't help but fear for you."
It's not 6% for a lot BOI customers now, for many it is below zero after they hiked up mortgage rates. As banks continue to get downgraded like Co-op last week mortgage costs will go up. Low interest rates are deterring savers so banks have to borrow money from the markets. QE and funding can't last forever to save them. The tipping point is coming.
You can brag about 6% returns but a traditional landlord return was 10% before the stimulus. Without the stimulus you will find your 6% vanish.
In reality you are playing Russian route and your best chance out of financial suicide is to offload now or begging of 2014 with Help to Buy. That is if Help to Buy isn't scrapped.
BTL'er= a parasite preying on the young. BTL loans should be banned thus forcing investment in something that adds to the economy long term.
You and rant is two, that is not lots and certainly not enough to affect the market.
If you think taking 6% average yield on unmortgaged property is sucidal I can't help but fear for you.
I can't see any incumbent government allowing the housing market to crash too badly. I have listened for years to the doom mongers prophesising the collapse of the housing market only to watch prices increase and with the rapidly approaching help to buy scheme I can only see prices getting higher and higher.
The PRI is going to struggle no matter what you think, we are seeing a huge increase in the number of Landlords looking to exit their investments. Once prices start to increase after Jan 14, this will increase exponentially.
As a tenant that has just been served notice, it's going to be unstable times ahead.
RE "Mate, you are the only one left, all the rest have admitted defeat"
No you are wrong, there are lots of us. Not everyone is, stupid, desperate or ill informed. Stretching yourself to buy when interest rates are 0.5%, 5% deposits and house prices are hugely overvalued is suicidal.
Its a huge bubble when people with big deposits and good wages can't afford to buy. It will all pop as mortgage rates go up as the country is downgraded.
You can't have a recovery when its all stimulus and you don't address the debt issues. Inflation is out of control and making us all poorer, less money to spend and less chance of recovery.
Someone's had their cage rattled this morning, lol!
Average FTB property according to Halifax is now around £120K. With the 20% of Help To Buy, those joining this scheme will need to put aside £400 a month for five years just to repay the interest free loan, on top of paying off a mortgage. These are the same people that are struggling to save money now, as highlighted in the article. Doesn't exactly sound sustainable.
Five years ago, interest only mortgages were regarded as a good way to get round the affordability problems and get on the property ladder. Fast forward to today and there are real concerns about the amount of people who have no capital repayment vehicle in place on their IO loans. Help To Buy is heading in exactly the same direction, only this time with taxpayers' money at stake.
Interest rates will go back up you know.
When they do I think that there is going to be a whole world of pain.
There are a huge number of people who are being helped by the forbearance of the lenders.
When the base rates go back up to something sensible there are going to be a large number of property owners with large mortgages that have managed to pull themselves back from the brink to be shoved hard in the middle of the back over the precipice again.
The cost of living has gone up so much and wages have been static for so long that any free spending money that they might have had after rates dropped will now have vanished.
I think that there are some very scary times ahead - unless of course someone can explain to me how it could be avoided.
are you still fighting the cause?
Listen the battle is lost, it is over. All these folk who want to escape being lifelong renters, where exacly do you think they will buy?
Even if BTL yields drop below 5% invetors are unlikely to cash in and release property onto the market.
the market has changed for the forseeable future and other than a low % transition change on the Rent/ buy border, where folk are now is where they will be.
Mate, you are the only one left, all the rest have admitted defeat, gone off and bought or accepted they missed out. You were told time and time again over 3 years, but you with a psuedo authority on our industry knew best.
I am fairly confident you won't belt up, your sort don't know when the game is up but the market is now compounding away from you at about 1.5% per month, not much till you realise that is about 19% for the year.
This wasn't a story you should have found comfort in.
There's never been a better time to get into BTL though. Apparently.