New research is showing that it can take young first-time buyers only a year to save for a deposit with Help To Buy, although the process is much quicker in the north of England and Scotland than other parts of the UK.
The data from Compare My Move has revealed that 22 to 29-year olds can get a deposit together in as little as seven months in Burnley in Lancashire, if opting for the government’s Help To Buy scheme. Of the top 10 performing towns and cities, from a total of 50 surveyed, Doncaster is the furthest south, but analysis of the whole report reveals a more complex situation.
Varied regional picture
Help To Buy offers a government-backed loan of 20% in addition to a deposit of 5% from the buyer. The national average time taken to save for a deposit for the Help To Buy Equity Loan is 12 months, compared to three years for a 15% deposit, but the regional picture is complicated and varied.
In Burnley, the 5% deposit equates to £3,479 that according to Compare My Move’s work takes seven months to save for. That’s 14 months faster than saving for a 15% deposit, but soberingly millennials take less than a year to save for a 5% deposit in only 14 of the 50 places surveyed.
Compare My Move
By contrast, it takes five years and eight months to save for that 5% in Oxford, the worst performing city. Young first time-buyers in Cambridge take just under a year less, while London is third in the ‘bottom 10’.
Help To Buy was launched in 2013 to give a much-needed boost to the new-build market, and in the recent Budget Chancellor of the Exchequer Philip Hammond announced the scheme would be extended by two years to 2023.
Millennials ‘struggle to juggle to rent and saving’
The research highlights how hard it can be for ‘Generation Rent’ to put money aside for a deposit while renting. The national average amount on rent while saving for the Help To Buy deposit is just over £5,000, but again, regional variations apply. At the extreme end of the scale, an eye-watering £38,420 would be needed in Oxford while saving for the 5% required.
Compare My Move co-founder and director Dave Sayce said: “Our research shines a light on the struggle man young renters face in getting together a deposit for their first home. In many cities it’s a race against rent to save a deposit as a prospective first-time buyer. In cities and towns where rent greatly outstrips the national average, it can take more than a decade for renters in their 20s to save up a 15% deposit.
“It’s clear from our research that the Help to Buy scheme acts as an important catalyst for getting renters on the property ladder, and its extension to 2023 in the recent budget will act as a lifeline to generation rent.”