Saving for a mortgage deposit now takes ten years

4th July 2023

The time it takes to save for a mortgage deposit in England has hit 10 years, having significantly increased over the past decade according to new research by Generation Rent.

In 2012 it would, on average, take 6.8 years to save for a deposit for a mortgage. Higher rents and house prices mean – it now takes nearly a decade, at 9.6 years to save for a deposit.

The research shows that the region least affected is the North East, where it takes the same amount of time as it did a decade ago (approximately 4.6 years) to save for a deposit; London is the worst affected taking an extra 4.3 years to save for a deposit, making the average time to save for a deposit in the capital an astonishing 18.3 years. And that’s only if you live in a shared home that whole time.

This means saving can be especially tricky for a young couple wishing to start a family or a single parent trying to look after their child; shared accommodation can work well for some renters but too often many are forced into shared accommodation because nothing else is affordable.

The time it takes to save is in part due to the rent on the median one-bed home across England rising from £495 in 2012 to £725 in 2021. This has partially offset the rise in the median post-tax salary from £16,823 in 2012 to £21,849 in 2021.

The other major factor is the increase in the price of the average first time buyer home, which rose by 72% between 2012 to 2023 to £253,202.

With ordinary renters facing many more years in the rental market before being in a position to buy, we are calling on MPs to back the Renters (Reform) Bill and make sure that renters are properly protected from unfair evictions and substandard housing.

To reduce rents and therefore the length of time it takes to save, Generation Rent is calling on the government to build enough homes in the places people want to live, including social housing which will directly help those most in need.

We looked at government data on rents, house prices and salaries to estimate how long it would take the typical single renter to save for a deposit. Assuming that tenants saved 20% of the income they had left after tax, student loan contributions and rent, the median renter nationally could save £2177 per year in 2012, which rose to £2630 per year in 2022-23, a rise of 21%.

Because the average 10% deposit for first time buyers was £14,745 in 2012 it would take 6.8 years of saving to reach that. Now that the deposit is worth £25,320, it would take 9.6 years of saving to reach.

The higher rents and prices in London meant that in 2012 it already took 14 years to save the average first time buyer deposit of £26,037, and this was based on the median earner only being able to rent in a shared home at 40% of their salary. A one-bed flat at £975 per month would cost 42% of their income so they would likely fail a letting agent’s affordability criteria.

A decade on, the median rent on a one-bed in London is £1276, 48% of the median salary. A renter realistically could only live in a shared house, but even then it would take 18.3 years to raise the average deposit of £45,979.

In regions like the West Midlands, the leap is especially stark with an increase in the average house price from £119,887 in 2012 to £204,338 in 2021. Even in areas that did not see as great an increase, like Yorkshire and Humber, the average house price increased from £109,599 in 2012 to £175,087 in 2021 meaning a deposit increase from £10,960 to £17,500. How can renters ensure that they get on the property ladder in the future when the time it takes and the amount they need are continually increasing?

These increases mean that renters will on average have to rent for longer than ever before being able to accumulate a deposit; the near twenty years it takes to save for a deposit in London for a typical renter means that conditions for those earning less are even worse.

Most renters dream of owning their home one day, but the struggle to save has got even worse in the past decade. In much of the country, the typical worker faces at least a decade living and saving in the private rented sector before they have a mortgage deposit. That gets close to two decades for Londoners and even then that’s only possible by sharing with other people into their forties.

More people are renting from private landlords for longer stretches of their lives, and want a home that allows them to settle down. That’s why we need the measures in the Renters (Reform) Bill that will stop landlords evicting tenants without a valid reason, drive out criminal landlords and improve the quality of private rented homes.