A recent study has suggested that an entire generation of people who rent their property are resigned to the fact that they might never own their home.
The report has revealed that while the vast majority of people in the UK desire to own their own home (if they don?t already), significantly fewer believe they will ever achieve this.
Around half of 20-45 year olds in Britain today feel the UK views renting as the norm, like in other prominent countries in Europe. Yet, more than three quarters of people that don't pay a mortgage at present have stated that they would like to buy a home in the future.
It is believed that ?Generation Rent? have been put off considering owning a property due to the view that banks are reluctant to lend, or that the application process is too complicated or, more commonly, the size of the deposit is an unattainable sum of money for many.
These reasons could help explain why the majority of renters are making little effort to put money aside for a deposit, with only 5% bothering to make any contribution. The other 95% state that they tried to save but got nowhere, they have no money spare after all their monthly outgoings or they?re simply not interested in saving.
However, many within the industry feel that mortgage providers are not doing enough to inform first time buyers that there are suitable and affordable products on the market for them.
Some are pointing to the press coverage given to buying a property in recent years as the main reason why first time buyers are feeling priced out. The general message has been that at least £40,000 is needed as a deposit to buy a first home. Many don?t even go through the application process in the fear of being rejected off the bat.
Ray Black, IFA and Managing Director of Money Minder, shares his expert view: ?Getting on the first rung of property ladder seems harder now then ever before. In my own personal opinion, I think that given a bit of time, this is going to change quite dramatically."
"Unfortunately, I expect that at the same time that homes become more affordable, there will be lots of reports in the press about people having their existing homes repossessed or finding themselves in the position of being forced to sell."
"The reason these people will have to sell is the expectation that in due course interest rates will have to rise and for many, their current mortgage will become unaffordable which in turn leads to forced sales."
?When this starts to happen, house prices fall and we turn full circle once again. Those people that have had to rent, suddenly find themselves being offered 90% or even 95% once again by the banks that now have repossessed homes on their balance sheets that they would like to sell on and we all get the buying property bug again!?
And how did I get to these conclusions? No special inside knowledge to share, it's just normal cyclical economic business as usual."
