Speculation is growing ahead of the General Election around how first-time buyers will fair, and if they’ll receive the support they really need to get onto the property ladder from political parties.
Skipton Building Society (part of the Skipton Group) has spoken to tenants across the country, looking at the rise in the number of tenants who are considering moving back in with their parents to boost their property savings.
The biggest hurdle to the property ladder for many first-time buyers is their lack of affordability, particularly when it comes to savings, not only saving for a deposit but the overall costs associated with buying their first home too. Skipton’s research reveals that four in 10 renters would consider moving back in with their parents so they can save enough to get on the property ladder.
The poll of 2,000 renters with an ambition to buy a home found while 52% of those considering it feel it’s a move backwards, 91 per cent say it would be a short-term sacrifice for a long-term gain. While 22% estimate if they were to make the move, they could have enough saved within a year for a house deposit.
Office for National Statistics data shows that within England, London had the highest annual percentage change in private rental prices in the 12 months to January 2024, at 6.9%, while the North east saw the lowest, at 4.7%.
Despite the increased prices the Royal Institution of Chartered Surveyors (RICS) reported an increase in tenant demand, in their January 2024 UK Residential Market Survey as some renters may have no other option than to pay the prices.
Skipton Polled the more than one in five (22%) renters with no option to move back in with mum and dad as to why it wouldn’t be possible, of these one in three state their parents don’t have the space for them, 27% said they would end up living too far away from work and 37% admitted they wouldn’t be able to give up their independence. But nearly a quarter (23%) simply wouldn’t want to live by someone else’s rules, according to the figures.
Skipton’s research follows rental data from Hamptons, part of the Skipton Group which revealed the average rent paid by someone leaving the parental home passed £1,000 pcm for the first time in 2023.
Which means the average would-be tenant who didn’t fly the nest would have the opportunity to save up to £12,290 if they could live rent-free with parents for a year.
With rising rents and the cost of living, the tenants polled are currently only able to save £187 a month towards their first house deposits – but if they were to move into the ‘Hotel of Mum & Dad’ they could put as much as £808 away monthly. Also wwith 20% feeling it will take them more than five years to save for their first home whilst renting, 63% admit their family are unable to contribute to their savings.
Jennifer Lloyd, Head of Mortgage Products and Proposition at Skipton Building Society, says “people trapped renting is one of the biggest housing challenges we face across the country, which is having a massive impact on the fabric of our society. With escalating rents and the cost-of-living squeeze further impacting people’s ability to save for a house deposit – it’s making it almost impossible for people get onto the property ladder so it’s no wonder we are seeing a rise in the number of tenants considering a move back home. For those fortunate and willing to make this move, then it might be a vital first step in helping them to boost their savings. However, as the research reveals, we know for many tenants, this isn’t option for them.”
The study went on to find more than a fifth (22%) who would consider shacking back up with Mum and Dad would use the opportunity to pick up financial advice from them. Another 20% believe it would reduce their commuting costs, while 36% think they’d be able to pay off debt more quickly.
But while 13% believe they wouldn’t have to contribute anything to their parents in terms of rent, the average respondent wouldn’t be going rent free at home and expect to hand over £252 a month, and when it comes to moving home, six in 10 said they would look forward to spending more quality time with their parents or guardians, if they moved back in.
Another 45% would enjoy the regular home-cooked meals, 18% think they’d benefit from more outdoor space and 17% would even love being reunited with childhood pets.
Lloyd adds “we know there isn’t one quick solution to addressing this huge societal challenge of tenants being trapped in renting cycles, with rents escalating faster than mortgage payments and the increasing costs of living but doing nothing isn’t going to solve this UK housing issue. We know the Track Record product will not be able to help everyone and is only part of the solution for this group of people, but as a lender, we’re taking a stand to offer innovation in this space to help turn generation rent into generation buy.”
Tenants want the next government to control rent rises
Tenants in the private rented sector (PRS) want the next government to focus on controlling the pace of rent rises, a survey has found. The research from Zoopla and Ipsos says this demand is closely followed by the need for increased home construction and enhanced rights and protections for renters.
While all political parties agree on the need for rental reforms, specific measures to manage rent inflation are missing from manifestos.
Rent inflation for new lets currently stands at 6.6% but is projected to fall below earnings growth in 2024. The survey also found that just a quarter of voters believe that political parties pay attention to housing.
Managing the pace of rental growth
Zoopla’s executive director, Richard Donnell, said “renters want more focus on their priorities including raising housing benefit levels and managing the pace of rental growth, while also improving rights and protections. Rent reforms are on the agenda for all parties but managing rental inflation is best achieved by growing supply through new home building as measures to control rents can reduce new investment. British voters have high expectations from a new Government on housing. The overarching response is ‘build more homes, but other things matter too’.”
Encourage new home construction
Despite scepticism about the government’s ability to encourage new home construction, half of voters (50%) disagree with the notion that there isn’t much governments can do. A significant proportion (21%) strongly believes that governments can positively impact home-building rates.
The main political party manifestos consistently target 300,000 or more homes annually in England, a goal not achieved for over four decades. In 2023, net additions to housing supply fell 65,000 homes short of this target.
Reducing homelessness and rough sleeping
Mr Donnell said “people’s experiences and priorities vary based on their position in the market. It is clear voters are well aware of the pressures on the housing market with reducing homelessness and rough sleeping and doing more to reduce empty and under-utilised homes in the top three priorities. Building more homes has the potential to start addressing many of the priorities identified in our survey with Ipsos. We have been getting closer to the 300,000 homes a year level but breaking through will require need a big political push to deliver the homes the nation needs across all housing tenures.”
How to pay for affordable housing
Public opinion diverges on how to pay for affordable housing with 41% supporting more government borrowing for this purpose. Only 26% are willing to accept higher taxes – suggesting the funding of building new homes will be a challenge.
Beyond rent control and home building, voters also expressed concerns about homelessness and rough sleeping (41%) and 39% want to see fewer empty homes.
550,000 homes needed per year to fix housing shortage
More than half a million homes need to be built by 2031 to clear the current supply backlog. Research from property consultancy Bidwells, based on data produced in conjunction with the Office for National Statistics, reveals that England has a housing shortage of 2.5m homes.
The analysis found that 550,000 new homes need to be built each year between now and 2031 to clear the backlog and allow for future population growth. This is higher than Labour leader Keir Starmer’s pledge to build 1.5m (300,000 a year) by the end of parliament should his party come to power. At that rate the housing crisis would not be solved for another 40 years, Bidwells warns.
The research forms part of Bidwells’ new report, The Productivity Engine, which looks at the key barriers holding back UK productivity growth as one of Europe’s most restrictive planning systems and a lack of public sector investment in housebuilding entrenches the shortage.