One in five Generation Renters believe it is ‘virtually impossible’ to get onto housing ladder

Chancellor George Osborne
Chancellor George Osborne
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MORE THAN one in five young and middle-aged people who are not on the property ladder believe it is “virtually impossible” to get a mortgage, a major new study has revealed.

The largest research project of its kind in the UK highlights the divide between the haves and have-nots in Britain’s housing market.

It shows the polarising effect of home ownership; 57 per cent of parents who own a property have or plan to help their children with their deposit, compared to 24 per cent of parents who rent, underlining the importance of property ownership for the prosperity of future generations.

The Generation Rent report from Halifax is based on more than 8,000 interviews with 20--45 year olds and more than 1,000 parents of the same age group.

It found that 21 per cent of prospective first-time buyers believe it is virtually impossible to obtain a mortgage, compared to 12 per cent of parents.

The need for young people to move back in with their parents appears to be a growing issue, the report found.

In 2015, 28 per cent of parents of adult children aged between 20 and 45 said their children had moved back into the family home, compared with 24 per cent in 2012.

However, there is also a growing sense of optimism compared to previous years, the report suggests.

Last week, the Government said that nearly 100,000 people have now been helped onto or up the property ladder by its flagship Help to Buy schemes, which help people buy a home with a deposit as low as 5 per cent.

Some 80 per cent of people using Help to Buy have been first-time buyers, it said.

Craig McKinlay, mortgage director at Halifax, said: “The Generation Rent report shows a clear divide between parents and their children as regards optimism over getting on the housing ladder. In reality there are more mortgages available which require a 5 per cent deposit and first-time buyer numbers are increasing.

“But whether it is giving their children a cash lump sum or providing a roof over their heads while they save, it is clear the bank of mum and dad will have a role to play in helping their children get on the property ladder for the foreseeable future.”

In Yorkshire, the increasing gap between average earnings and property prices will continue to put pressure on parents.

The average house price in 2014 was £159,180, yet the average salary was £23,306, significantly less than the £31,309 gross annual income needed for a mortgage, according to the National Housing Federation.

In North Yorkshire, the average house price was £216,570 and the average salary £24,398, almost half the £49,502 needed for an 80 per cent mortgage in the area.

Lloyds Banking Group, which owns the Halifax and is one of Yorkshire’s largest private sector employers, has called for a progressively rising target for national housebuilding to deliver 2m to 2.5m new homes by 2025.