Renters in the UK are finding it increasingly difficult to save for a house deposit, with only 17 per cent reporting active savings in July, down from 31 per cent in January. This is according to the latest Barclays Property Insights data, which combines information from across the bank and consumer research to analyze housing trends.
Spending on rent and mortgages grew by 5.2 per cent year-on-year in July, marking the highest increase since February. Spending on utilities also rose by 2.7 per cent over the same period. These rising costs have led to a squeeze on renters’ disposable income compared to homeowners, contributing to a decline in confidence about entering the property market.
The number of renters saving for a deposit has reached its lowest point in six months. House prices have now overtaken deposit size as the main barrier to homeownership, cited by 38 per cent of respondents compared to 35 per cent who pointed to deposit costs.
Sixty-two per cent of renters have seen or expect their rent to increase this year, making it harder for them to save. Only 12 per cent believe they could own a home within the next year, while 16 per cent think it will be possible within five years—a decrease from 19 per cent in June.
Affordability remains a challenge: nearly four in ten renters say they cannot afford to buy a home where they currently live or would like to live. Additionally, interest in homeownership is waning among some renters; 28 per cent report being uninterested in owning a home—the highest figure recorded this year.
To save for deposits, renters are cutting discretionary spending (14 per cent), reducing holidays (11 per cent), or taking on side jobs (8 per cent). Fewer than one-fifth are actively building up savings for a deposit.
More than half of all consumers—55 per cent—believe renting is more expensive than paying a mortgage. This view is more common among homeowners (61 per cent) than renters (42 per cent). Housing accounts for nearly one-third of renters’ take-home pay but just over one-quarter for homeowners. Homeowners surveyed reported higher average incomes (£37,775) compared with renters (£23,562).
A quarter of renters say they struggle with monthly payments versus one in six homeowners facing similar difficulties with their mortgage payments. Nearly half of renters have changed their spending habits to keep up with housing costs.
Among those looking to buy, almost half prefer saving as much as possible for their deposit rather than borrowing more and facing higher repayments later. A third would consider moving into smaller properties to reduce borrowing needs.
Jatin Patel, Head of Mortgages, Savings and Insurance at Barclays, said: “Many people dream to one day own a home, but our latest findings highlight how renters are finding it ever harder to save for a deposit while keeping up with rising costs. More positively though, we’re still seeing savers create strong habits, and consider carefully the balance between getting into the market quickly with a lower deposit or trying to minimise monthly repayments in the longer term.
“We’re committed to giving first time buyers the tools they need to get on the property ladder. That’s why we’ve adapted our product range to include new propositions like Mortgage Boost, so that family members can still support first time buyers, even if they don’t have a lump sum that they can gift up front or use with our Family Springboard mortgage.”
Will Hobbs, Managing Director, Barclays Private Bank and Wealth Management, said: “The UK economy remains in a better place than the public debate would suggest. While there is, as usual, much to worry about, the fact that real (inflation adjusted) household incomes continue to grow briskly remains an important positive, as is the still substantial arsenal of ‘excess’ savings.
“The key to unlocking this pent-up spending power is confidence, a difficult factor to measure and to forecast. There is always much that can go wrong in the path ahead, but it was ever thus. Hindsight happily tells us that even the blind optimist has triumphed over the sober pessimist for most of the last several centuries. For the UK’s economic outlook at the moment, the causes for optimism are more substantial than widely acknowledged.”
Consumer research referenced was conducted by Opinium Research between July 18–22 and July 25–29 on behalf of Barclays using representative samples of UK adults by age group and region.