Credit, Collections & Insolvency News
New research by Skipton Building Society has found that rising rental costs has shown that 40% of renters are considering moving back in with their parents to boost their first-time buyer savings.
The poll of 2,000 renters with an ambition to buy a home found while 52 per cent of those considering it feel it’s a move backwards, 91 per cent say it would be a short-term sacrifice for a long-term gain. While 22 per cent estimate if they were to make the move, they could have enough saved within a year for a house deposit.
ONS data shows that within England, London had the highest annual percentage change in private rental prices in the 12 months to January 2024, at 6.9%, while the North east saw the lowest, at 4.7%.
Despite the increased prices The Royal Institution of Chartered Surveyors (RICS) reported an increase in tenant demand, in their January 2024 UK Residential Market Survey as some renters may have no other option than to pay the prices. Skipton Polled the more than one in five (22 per cent) renters with no option to move back in with mum and dad as to why it wouldn’t be possible, of these one in three state their parents don’t have the space for them, 27 per cent said they would end up living too far away from work And 37 per cent admitted they wouldn’t be able to give up their independence. But nearly a quarter (23 per cent) simply wouldn’t want to live by someone else’s rules, according to the OnePoll.com figures.
Skipton’s research follows rental data from Hamptons, part of the Skipton Group which revealed the average rent paid by someone leaving the parental home passed £1,000 pcm for the first time in 2023. This means the average would-be tenant who didn’t fly the nest would have the opportunity to save up to £12,290 if they could live rent-free with parents for a year.
With rising rents and the cost of living, the tenants polled are currently only able to save £187 a month towards their first house deposits – but if they were to move into the ‘Hotel of Mum & Dad’ they could put as much as £808 away monthly.
Meanwhile, 20 per cent feel that it will take them more than five years to save for their first home whilst renting, 63 per cent admit their family are unable to contribute to their savings.
Jennifer Lloyd, Head of Mortgage Products and Proposition at Skipton Building Society said “People trapped renting is one of the biggest housing challenges we face across the country, which is having a massive impact on the fabric of our society.
“With escalating rents and the cost-of-living squeeze further impacting people’s ability to save for a house deposit – it’s making it almost impossible for people get onto the property ladder so it’s no wonder we are seeing a rise in the number of tenants considering a move back home.
“For those fortunate and willing to make this move, then it might be a vital first step in helping them to boost their savings. However, as the research reveals, we know for many tenants, this isn’t option for them.
“And this is why it is important renters have more options available like the Track Record mortgage for them to buy a home when building a deposit isn’t an option. We want to empower more renters to achieve their home ownership aspirations sooner, without the help from the ‘hotel of mum and dad’ or ‘bank of mum & dad’ too.”
The study went on to find more than a fifth (22 per cent) who would consider shacking back up with mum and dad would use the opportunity to pick up financial advice from them. Another 20 per cent believe it would reduce their commuting costs, while 36 per cent think they’d be able to pay off debt more quickly.
But while 13 per cent believe they wouldn’t have to contribute anything to their parents in terms of rent, the average respondent wouldn’t be going rent free at home and expect to hand over £252 a month.
And when it comes to moving home, six in 10 said they would look forward to spending more quality time with their parents or guardians, if they moved back in.
Another 45 per cent would enjoy the regular home-cooked meals, 18 per cent think they’d benefit from more outdoor space and 17 per cent would even love being reunited with childhood pets.
Lloyd concluded “We know there isn’t one quick solution to addressing this huge societal challenge of tenants being trapped in renting cycles, with rents escalating faster than mortgage payments and the increasing costs of living but doing nothing isn’t going to solve this UK housing issue.
“We know the Track Record product will not be able to help everyone and is only part of the solution for this group of people, but as a lender, we’re taking a stand to offer innovation in this space to help turn generation rent into generation buy.”
