Renters could end up £2.6 million worse off over their lifetime than homeowners

Meanwhile, half of prospective first-time buyers say they have given up looking for a property as they feel so overwhelmed.

Two-thirds (58%) of people aged 35-54 are unsure whether they’ll buy a home, or have ruled it out entirely, according to research from Yorkshire Building Society.

Meanwhile, one-fifth (21%) of 18-to 34-year-olds are also uncertain if they’ll buy a home in the future.

However, those choosing not to buy a home, or renters unable to get onto the property ladder could find themselves paying more in the long run.

The added expense of renting

Yorkshire Building Society calculated that renters could be £2.6million worse off when considering lower mortgage payments and the increase in a property’s value over time.

It looked at the average rental and mortgage payments individuals would pay over a 55-year period and factored in increases to house prices and rental yields.

Even if a renter invested an equivalent first-time buyer deposit of £10,000 over the same timeframe, the homeowner would be left significantly better off.

Not only does this leave renters paying more for less, but it also impacts their ability to pass on wealth to future generations, which could perpetuate the struggle to buy a home.

“These latest research findings are perhaps our most stark yet, pointing to a potential loss of faith in the idea of homeownership,” commented Ben Merritt, Director of Mortgages at Yorkshire Building Society.

“That – coupled with our lifetime analysis of what this means for anyone who has to settle for long-term renting – shows just how big an issue this is for the UK right now, which our respondents have seconded in the priority they have assigned to housing,” he continued.

What’s stopping people getting on the ladder?

Of the prospective first-time buyers polled by Yorkshire Building Society, 50% admitted to feeling overwhelmed by the complexity of the property market, to the extent where they have given up on homeownership.

Meanwhile, 43% had put their homeownership plans on hold due to high prices, and 41% stated that the cost of living was a significant barrier to buying a home.

In order to increase affordability, 69% of first-time buyers said they would consider taking on longer mortgage terms as this would result in lower monthly payments. However, because you are borrowing for longer, you will end up paying more interest overall.

“While it is obviously a worrying situation for first-time buyers, we want them to feel encouraged that there are solutions out there for them and if more industry players can galvanise behind this issue and give borrowers hope, they can see how compelling a prospect property still is as an asset,” said Merritt.

With mortgage rates continuing to fall, there are positive signs for the housing market. For instance, this July saw mortgage borrowing hit its highest point since 2022, with mortgage approvals for house purchases also rising.

As a result, prospective buyers may feel motivated to start saving for their first home and finally feel able to afford to get on the property ladder.