Research reveals how first time buyers benefit from Help to Buy

Young people in Britain saving for their first home can get on the property ladder two years earlier thanks to the Government’s flagship Help to Buy scheme, new research has found.

Getting on the housing ladder faster helps them save £10,000 on average in rent costs, according to the study from Compare My Move which examined how long it takes young renters in 50 British towns and cities to save a deposit for their first home.

The average British renter can save enough for the 5% deposit needed for the Help to Buy Equity Loan in only 12 months, compared to the three years it would take to save for a 15% deposit,

The reality is widely different across towns and cities in Britain. In only 14 of the largest British towns and cities can the average renter save up for a 5% deposit in less than a year.

The best location is Burnley where it takes seven months to save a 5% deposit while Oxford is worst at over five years.

Young renters in London, Reading, and Cambridge take more than a decade to save up a 15% deposit on their first home but in London they can cut off seven years of saving through the Help to Buy scheme, taking it to three years and seven months to save up a 5% deposit.

The average first time buyer in Britain pays £15,000 in rent while saving up a 15% deposit, and £5,000 while saving up for a 5% deposit.

In London, the higher annual salary helps discount the high rent and living costs, but the sheer expense of houses in the capital means that renters will take more than a decade to save the £63,000 needed for a 15% deposit.

However, with London Help to Buy Scheme, savers can get to the £21,000 needed for the average 5% deposit in three years and seven months, though in that time will pay more than £26,000 in rent.

A further analysis shows that first time buyers in Burnley can save up the £10,436 needed for a 15% deposit in one year and nine months. This means that with Help to Buy savers get on the ladder one year and two months faster.

Next is Dundee in Scotland and Hull in Yorkshire, where renters can save for a 5% deposit in eight and nine months respectively while renters in Sunderland, Blackpool, Liverpool and Glasgow can save up a 5% deposit in 10 months.

‘Our research reveals the struggle many 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 20’s to save up a 15% deposit,’ said Compare My Move co-founder Dave Sayce.

‘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,’ he added.