New figures have revealed that first-time buyers are now paying an eye-watering £163,047 on rent before they are able to purchase their first home. This represents a 40 per cent increase in a decade, according to research from specialist mortgage lender Perenna¹.

Back in 2015, renters typically spent £116,427 before buying. Today, they are parting with £46,621 more, as rising rents and living costs make saving for a deposit harder than ever¹.

This amount is now equivalent to a 60 per cent deposit on the average UK home, highlighting how much money is being spent without building equity or ownership¹.

While this may seem like an issue only affecting first-time buyers, it has significant implications for homeowners and landlords too.

• For Homeowners Looking to Sell:
  First-time buyers are the base of the housing chain. When fewer people can afford to take that first step, it slows demand for entry-level homes, which in turn makes it harder for sellers to move up the ladder. This can lead to slower sales and longer periods of uncertainty when trying to complete property transactions.
• For Landlords:
  Higher rents mean strong demand for rental properties, which can support yields. However, it can also create political and regulatory pressure for rent controls or stricter tenant protections. With average rents continuing to rise faster than wages, landlords should keep a close eye on potential government interventions.

According to the Office for National Statistics, the average UK house price reached £270,000 in July¹.

• A 10 per cent deposit now requires around £27,000, a target many renters find increasingly out of reach due to high rental costs and the elevated cost of living¹.
• This creates a vicious circle, with tenants struggling to save while paying high rents, further delaying their entry into the housing market.

Even for renters who have managed to save, strict mortgage affordability rules are another obstacle.

• Most single buyers are limited to borrowing 4.5 times their annual salary, which can be insufficient to buy in many parts of the country¹.

Some lenders are now loosening these restrictions following regulatory changes announced by Chancellor Rachel Reeves, potentially opening the door for more buyers to secure mortgages¹.

For homeowners, this could mean a broader pool of buyers and a stronger, more active market when selling a property.

Perenna’s research also found that first-time buyers now spend 12.8 years renting before purchasing, up from 11.4 years a decade ago, based on the assumption they start renting at age 21¹.

Colin Bell, founder of Perenna, said¹:

“There is a time and a place for renting. While some may make the personal choice to rent in the long term, others are forced into a seemingly never-ending cycle of rising costs.

Renting is ultimately money spent without return. Unlike mortgage payments, which build equity, rent offers no stake in the property – even though renters often pay more each month than they would for a mortgage.”

Rents Hit Record Highs

The rental market is under extreme pressure, with average rents rising by 5.7 per cent in the year to August¹:

• UK average monthly rent: £1,348
• London: £2,253, the highest in the country
• North East: £745, the lowest
• Wales: saw the sharpest annual increase, up 7.8 per cent to £811
• Scotland: up 3.5 per cent to £1,002

Ben Twomey, chief executive of Generation Rent, said¹:

“Rents continue to rise faster than wages, swallowing more and more of people’s income.

We rightly have caps on our energy and water bills, but there are no protections to stop landlords from pricing us out of our homes.”

For landlords, this highlights both opportunity and risk. Strong rental demand can be positive for returns, but it also increases the likelihood of political action to control rising rents.

To help renters break free from the rental trap, some lenders are introducing low-deposit mortgage products.

• Newcastle Building Society, for example, has recently launched a two per cent deposit mortgage¹.

While these products could help some first-time buyers, they often come with higher interest rates and strict eligibility rules, meaning they are not suitable for everyone.

Colin Bell believes more needs to be done¹:

“With house prices rising, renters are spending their hard-earned money without gaining an asset. The market needs better financial mechanisms to lift buyers onto the ladder.”

• For Homeowners:
  The introduction of more flexible mortgage rules and low-deposit products could increase the number of active buyers in the market. This may help maintain property values and make it easier to sell your home when the time comes.
• For Landlords:
  Higher rental costs may strengthen demand for rental properties, but landlords should plan for possible regulatory changes such as rent caps or increased tenant protections. A balanced approach to rent setting will help maintain strong relationships with tenants while reducing risk.

The next few months will be crucial for both buyers and sellers. With new mortgage products emerging and lenders relaxing affordability criteria, more renters could finally make the move into homeownership.

For homeowners and landlords, staying informed about these shifts is essential to protect investments, plan future moves, and adapt to a changing housing landscape.