The average first-time buyer deposit stands at £26,956 forcing more people into the private rented sector. Halifax's third annual Generation Rent report is based on interviews with 20 to 45 year olds and their parents.
It shows 31 per cent of 20-45 year olds are only be prepared to save for three years to raise the necessary house purchase deposit. Half of those interviewed predicted renting would grow and the UK would become a nation of tenants.
Just 15 per cent were saving more than £50 a month towards a deposit. While 38 per cent of 20-45 year olds say high deposits required is the greatest barrier to homeownership.
This has increased by 2 per cent since 2011 as deposit size is highlighted by 68 per cent as one of the top three barriers. A fifth of non-homeowners aged 20-45 have already given up on the prospect of owning a property and this rises to 43 per cent among 40-45 year olds.
Buy-to-let
The Halifax research shows major problems facing first-time buyers despite Government schemes such as Help to Buy that aims to introduce more 5 per cent deposits into the market.
The rise in rental demand is good news for buy-to-let landlords who can rely on rising rents and fewer void periods in the coming years.
The private rented sector will need to pick up the slack of declining home ownership and it continues to rise in profile as first-timers are priced out of the market.
Some 52 per cent of those interviewed by Halifax believe Britain will become a nation of renters ‘within the next generation’, an increase from 46 per cent in 2011.
Other demographic trends such as higher divorce rates, immigration, a bigger student population and more flexible living habits are also driving buy-to-let forward.
It signals the UK housing market is turning more continental where nations such as Germany have around 50 per cent of people renting compared to around 30 per cent here.
Landlord risks
While the economics of becoming a landlord grow stronger it is worth remembering the risks involved in investing in property.
Firstly, there will always be concern you can bring in a tenant at the right rent and avoid void periods where it lays empty.
Secondly, house prices can fall, as they have done in recent years, so the more properties you own the more you are open to market fluctuations.
Thirdly, there are maintenance costs associated with owning a property including regular repairs due to general wear and tear.
Taking out landlord insurance can cover the cost of emergency repairs or unexpected events but it will not prevent the need to pay for general upkeep of the property.
Buy-to-let landlord are investors running what is effectively a business so it is important to be aware of the risks involved.
Furthermore, politicians are examining ways to professionalise the sector as it grows in importance. This could see more onerous checks on landlord such as joining a local register and monitoring immigration.
Despite the risks the long-term trends are on your side and many are turning to a buy-to-let portfolio as a long-term investment alternative to a pension.
National trends are in landlords' favour so join the most in-demand sector of the housing market and help house first-time buyers who can't afford a deposit.
