Two-thirds (66%) of Britain’s renting population aspire to own their own home but one in five (19%) are now finding it harder than before to step onto the housing ladder because of Covid-19.
This is according to research from specialist mortgage lender Vida which also found a fifth of key workers who rented were now having to reconsider plans.
The findings indicate a combination of the economic impact of the virus and a tightening of lending criteria – the rules lenders use to make decisions about who to accept for a mortgage – is threatening the homeownership ambitions of millions of people, causing Generation Rent to grow.
More than a quarter (28%) of renters who have had to push back their plans to buy said the virus had caused a fall in their income which had made buying less likely, while 27% had been forced to dip into funds which could have been used to help them buy a home of their own.
The research also revealed a tightening of lending criteria had impacted the ability of renters to buy too though, with 29% saying that stricter lending requirements had it much harder to find a mortgage.
Anth Mooney, CEO of Vida, said: “Finances have been hit by furlough and/or sudden loss of income or job security.
“This is not a problem which just affects young people. From the over-55s who have always aspired to own their own home to the key workers – the nurses, the social workers and the supermarket delivery drivers that are putting themselves at risk to keep us safe during this pandemic – Generation Rent spans all of the ages.”
Stamp duty holiday
Vida explained how the Stamp Duty holiday had also driven unprecedented demand in the housing market, pushing up house prices to record levels.
According to the ONS, house prices have risen by £11,000 since 2019 with the average property price now £245,000.
Andrew Montlake, managing director of Coreco Mortgage Brokers said: “The concern is that the gap between the haves, those that are lucky enough to have larger savings pots or assistance from parents and family, and the have-nots is getting wider and wider.
“We need a concerted effort from government, the housing industry and the mortgage market to ensure that we do not have a lost generation of prospective homeowners.”
Indeed, Vida thinks the mortgage industry and government need to step up support for underserved borrowers, including those stuck in a cycle of renting.
Mooney added: “Solving the challenge posed by Generation Rent is not impossible. It requires us to roll up our sleeves and work together – government, the housing sector and the mortgage market – to provide solutions for consumers who have been underserved and overlooked for too long.
“We need to innovate new mortgage options that provide a real solution for those stuck in Generation Rent, and we need to ensure that those feeling the economic effects of this unprecedented crisis still have an opportunity to find a home of their own in the future.
