Nine out of 10 people do not have enough money for a deposit

New research has revealed that nine out of 10 people renting a property in the UK do not have enough money for a deposit needed to buy a home.

According to new analysis by charity the Equality Trust, 86% of people renting property – over 6 million households – have less than the £8,840 needed for a 5% deposit for a mortgage on an average first home in the UK

Analysis of Office for National Statistics data found that the vast majority of renters are locked out of home ownership through a lack of income and savings, with many unable to afford even the cheapest housing.

It comes after a report by think-tank The Resolution Foundation found homeownership in England is at its lowest level since 1986 as soaring deposits and house prices have left many unable to get a foot on the property ladder.

The charity said that the wealth of the richest 100 people in the UK increased by £15 billion last year, with nearly a quarter of accumulating their wealth through interests in housing.

John Hood, acting director of the Equality Trust, said: “Our housing crisis is well documented, but it’s startling to see just how many people are priced out of owning their own home. At the same time, a small number of people at the top are making huge wealth from our dysfunctional housing market.

“This isn’t sustainable, and we need action from our politicians. That means reforming council tax, which hits the poorest hardest, and a substantial house building programme. Anything less threatens to lock a generation out of home ownership, and in to insecurity and punishingly high rents.”

Soaring rents mean it is becoming increasingly difficult for people to save up a deposit to buy a home.

According to the latest HomeLet Rental index, the average UK monthly rent is £773 while in London it is £1,575.

Tougher affordability checks from lenders and rising house prices have also made it more challenging for first-time buyers with smaller deposits to get on the property ladder.

Low interest rates combined with the economic recovery have done little to reduce the need for rented housing, while house price inflation ahead of wage growth has pushed property prices out of reach for many.