Cost of living, spiking inflation and record demand for starter-homes is severely limiting homeownership opportunities for renters living in London, according to exclusive research by Gradual Homeownership provider Wayhome.
With little to no option of getting on the property ladder ‘traditionally’, 51% of tenants in London would instead like to buy their current rental home, if it were feasible.
This is a popular option across the rest of the UK’s biggest cities, with only a slightly higher chance of tenants being able to consider ‘traditional’ homeownership depending on how far away from London they live.
UK’s biggest cities where tenants want to buy the home they currently rent
London
51%
Leeds
40%
Manchester
38%
Liverpool
36%
Birmingham
35%
In London, 57% of renters aged 18-34 years old want to buy directly via their landlord. 53% of 35 to 54-year olds and 36% of 55+ year olds are also are also willing to opt for this route to achieve homeownership.
The main reasons driving Londoners to buy out their landlord include the property’s location (52%), the fact they love the property (44%), and due to them already spending money and time to refurbish the space (31%). A third (30%) simply want to avoid the hassle of moving again in London’s severely oversubscribed market.
Meanwhile, 35% of homeowners in London say they would have considered buying the last home they rented, if it would have been possible at the time.
In reality, most UK tenants wanting to buy the property they rent in today’s market face tough challenges. Typically, when applying for a mortgage a first-time buyer will be approved for 3.55 times their gross household income1. When the average UK income of £47,662 is considered2, it can leave those buying on their own with a mortgage worth as little as £169,200.
Even if their landlord were happy to sell, the strict lending criteria enforced by the highstreet banks severely limits their chances of securing a mortgage sizeable enough to buy the property.
Wayhome, which could help tenants buy their home from a willing landlord, is warning that the property market needs to adapt to enable more people to get onto the housing ladder.
Nigel Purves, Wayhome CEO, comments: “The return of demand into city centres, including London, is sharply limiting viable buying opportunities for renters. Amid cost of living concerns and the need for effective hybrid working going forward, this is a real issue and could force Londoners to move further and further away from their place of work and into less desirable properties – whether they’re hoping to buy or continue renting.
“Unlike mortgage providers, who typically look at what an aspiring homeowner could afford to borrow – at Wayhome, we fundamentally believe that if someone can afford to rent a property, it should be financially possible for them to buy it.
“Tenants with landlords who might be willing to sell should get in touch as we may be able to help.”
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