We’re fast approaching 12 months since the first national lockdown started in the UK and, in that time, it seems many renters have become more determined to become homeowners as soon as possible.
69% of renters aged 18 to 34 state that homeownership is a life goal. 45% of them say that lockdown has made them more motivated than ever to achieve this goal.
However, this ambition is proving to be a difficult one for many young people to bring to fruition. 24% state that they have missed or been late with rent payments in the past year and 49% say are actively trying to improve their credit ratings because at the moment they are a significant barrier.
Covid-19 seems to have added to these financial concerns with one in five renters of all ages being placed on furlough. 26% of all renters state that their overdraft is a major concern, 21% are worried about gaps in employment affecting their mortgage chances, and 15% are worried that missed bill payments will come back to haunt them. 8% report they have an account being handled by collection agencies, while 7% have taken out a payday loan.
To top all of this off, the research shows that 14% of private renters say they have experienced a rent increase since the Covid-19 outbreak in March.
Affordability remains a stranglehold
The housing market has long been an exclusive environment – gone are the days where home prices aligned with average salaries, gone are the days where good mortgages are accessible to all.
Reports on the effect Covid has had on house prices and rent values tell us how healthy and strong the industry is, but they also fail to acknowledge that those people who were already struggling to afford homeownership are, by and large, in an even weaker position now. At the same time, those who are already homeowners have seen the value of their homes increase.
Despite all of this, there is a glimmer of hope. Mortgage providers have started offering more and more 90-95% LTV rates, especially to first-time buyers. Provided buyers are not thwarted by bad credit or previous financial woes, a good, affordable mortgage is now more readily available than it has been for a long time.
Furthermore, there are now good ways for renters to improve their credit scores. Free credit score checkers are everywhere online, and companies like CreditLadder enable rent payments to contribute directly to a positive credit score, something which was never available in the past.