30 Years to Save the Deposit for a Home
Byline: Becky Barrow Business Correspondent
MILLIONS of families will have to save for more than 30 years to raise the deposit required to get on to the property ladder, a study reveals today.
The report highlights the crippling impact of high property prices and the demand for large deposits on cash-strapped families.
In 1993, a typical family had to save for eight years to raise a deposit for a mortgage to buy a house. Now they have to save for 31 years.
As a result, many have little or no chance of ever being able to get on to the property ladder, says the Resolution Foundation think-tank.
Its report, published today, highlights how families forced to rent instead are paying such extortionate prices that they have less chance of saving for a deposit. The up-front costs of renting a one-bedroom flat - including a deposit, letting agency administration fees and a month's rent in advance - can total nearly [pounds sterling]2,200.
The report considered low to middle-income families bringing in between [pounds sterling]12,000 and [pounds sterling]42,000 a year. It established an average of [pounds sterling]18,600 and assumed a family with this income saves 5 per cent of it every month to purchase a first-time buyers' home costing [pounds sterling]125,000.
Putting away [pounds sterling]930 a year, it would take them 31 years to save the deposit of [pounds sterling]28,750 - or 23 per cent of the price of the house - required to get a mortgage.
By this stage, property prices could have climbed even further out of their reach.
Vidhya Alakeson, director of research at the Resolution Foundation, said: 'The lack of regulation in the exploding private rented market is a growing con-cern. We need more transparency so tenants at least know what fees they are facing.' The report comes after a warning from a leading member of the Bank of England that many young people will have to wait until they are 44 to buy.
David Miles said he understood most people put 'great value on having a home that they can reliably call home for many years', but said many will have to bury their dream. …