A single first-time buyer would need to save for more than nine years to build a deposit big enough to afford a typical London starter home, new analysis reveals.
According to the estimates from online broker Mojo Mortgages, a solo buyer paying average rent would be able to save £582 a month. At this rate it would take nine years and four months to accumulate the £65,471 deposit needed to access reasonably priced mortgages. That represents 15% of the average cost of a first-time buyer home of £436,475.
In its calculations Mojo Mortgages assumed typical monthly room rents of £995 and other bills and outgoings of £1,078 making £2,073 in total.
The Mojo Mortgages calculation suggest that the typical solo first time buyer would be around 30 by the time they were in a position to apply for a mortgage.
The London housing ladder is particularly hard to climb on to for single buyers because their borrowing power is so much lower than couples. They have also been held back by the end of the Help to Buy scheme launched by the Coalition government in 2013 which allowed first time buyers in London to obtain equity loans of up to 40% of a new build property’s value. The scheme closed to new applicants in October 2022.
In its manifesto Labour outlined plans for a mortgage guarantee scheme called “A Freedom to Buy” aimed at helping first-time buyers: The scheme would guarantee part of a buyer’s mortgage, reducing the amount needed for a deposit. However few details have been revealed yet, although it is expected that it will be announced in the Budget.
It is hoped the scheme could help more than 80,000 young people get onto the housing ladder.
There is currently no stamp duty to be paid by first time buyers up to £425,000, close to the average cost of a home in London
According to Mojo Mortgages it would only take three years 11 months for a typical solo buyer in Northern Ireland to save enough for a 15% deposit, the shortest wait for any region in the UK. Scotland comes next with a typical wait of four years one month.
