Broken Ladder: 4.5 years without food and clothing – then you can afford a deposit

New research out today reveals that the average first time buyer (FTB) would have to save every single penny of their remaining earnings after they’ve paid their rent for four and a half years to have a chance of getting a foot on the housing ladder. In London it would take nearly a decade.

Saving a more realistic 50% of discretionary earnings, allowing people to eat and clothe themselves, would take on average across England nine years, or in London nigh on 20 years.

The Home Builders Federation has today released a report, Broken Ladder 2,  identifying the increasing lack of accessibility to the housing market at a time when supply is critically low – last year saw the lowest number of homes built since 1923 – with mortgage availability remaining the biggest constraint.

HBF is urging Government to act. It is calling for the introduction of a Government supported Mortgage Indemnity Insurance scheme, to help incentivise lenders to lend at higher LTV rates that potential FTB’s could afford

The shocking figures reveal that on average a FTB in their twenties has £556 a month left after paying their rent, utility bills and council tax (see page 7). The average starter home in England costs £156k, requiring a deposit of around £31K, 469% of annual remaining income and necessitating a FTB to save every penny for 4.6 years.

In London, the higher salaries earned by young people are negated by higher rent costs and house prices, resulting in a deposit requirement 992% of remaining annual income or a young person saving every remaining penny for 10 years without any spend on food, clothes or travel – clearly an impossible ask.

Because of this, the average age of the unassisted FTB has rocketed, with even those on higher wages in their thirties struggling to buy. It has resulted in more and more people being forced to stay with their parents with nearly a third of men and a fifth of women aged 20-34 now still living at home. It has also seen young people delay getting married, starting a family or taking out a pension.

Stewart Baseley, HBF Executive Chairman, said today:

“This report reveals the extent of our housing crisis; first-time buyers - the life-blood of the housing market – are unable to access the property ladder in the way a healthy society requires and expects. The lack of mortgage availability and the huge deposit gap are stifling a market already starved of supply.  We desperately need to return to realistic deposit requirements and a properly functioning and sustainable mortgage market.

“At the same time, the Government must ensure that the new planning policy they are relying on to increase house-building is truly pro sustainable development and is put in place as soon as possible. Without more homes and more mortgages, young families will lack the security of a roof over their heads and the housing crisis will risk reaching the point of no return.”

Download report

For media enquiries, or to arrange an interview, please contact Steve Turner on 020 7960 1606 / 07919 307 760 or steve.turner@hbf.co.uk 

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Notes to Editors:

1. The Home Builders Federation (HBF) is the representative body of the home building industry in England and Wales. The HBF’s 300 member firms account for some 80% of all new homes built in England and Wales in any one year, and include companies of all sizes, ranging from multi-national, household names through regionally based businesses to small local companies: www.hbf.co.uk