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How to buy a house in Birmingham in just over a year - and save £10k in rent


12-10-2018

IN ASSOCIATION WITH Reach Solutions


Young people saving a deposit to get on the property ladder are spending a shocking amount on rent

By David Bentley

Young people trying to save for their first home have become a 'generation trapped in a cycle of renting', according to new research.
Huge amounts are being spent on paying rent while attempting to scrape together the cash for a deposit.

Data from Compare My Move shows that in Birmingham it takes an average of 44 months (3 years 8 months) to save the cash for a 15 per cent deposit on a home.

The average house price in the city is £157,130, meaning £23,569 is needed for a deposit.

According to the figures, the average rent in Birmingham is £368 a month - based on the cost of a room in a shared house - so £16,192 is spent on rent during the time it takes to get together a deposit.
And for those paying higher rent, or having less spare cash to put aside, it's obviously going to take even longer to save for a house.

Prospective buyers in Birmingham looking at house prices in an estate agent's window
Prospective buyers in Birmingham looking at house prices in an estate agent's window (Image: newsteam.co.uk)

This is how hard it is to move up the property ladder in Birmingham


Compare My Move points out that by using a Help To Buy Equity Loan scheme, you'd need a much lower 5 per cent deposit (£7,856) which could be achieved over 1 year and 3 months.

You would therefore save £10,672 in rent payments and get your first home 2 years 5 months earlier.

The grim reality varies across the UK, with people in Oxford hardest hit by the homes crisis. With high rents and high house prices to contend with, they take 17 years to put together a 15 per cent deposit.
At the other end of the scale, those in Burnley - where property prices are far lower - can save 15 per cent in just 1 year 9 months.


The average across Britain is three years to put aside a 15 per cent deposit averaging £17,000. During that time, an average of £15,000 is being spent on rent.

 It can be a struggle for young people to get on the housing ladder

It can be a struggle for young people to get on the housing ladder (Image: PA)

The Birmingham homes lost due to benefit cap and "bedroom tax"


Compare My Move Co-Founder Dave Sayce said: "Our research shines a light on the struggle many young renters face in getting together a deposit for their first home.


"In many cities itís a race against rent to save a deposit as a prospective first time buyer.

He added: "In cities and towns where rent greatly outstrips the national average, it can take more than a decade for renters in their 20s to save up a 15 per cent deposit.


"Itís 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."

Data for Birmingham
Average monthly take home pay - £1,509.68
Average rent price - £368
Living costs - £595.25
Disposable income - £546.43
Average first time buyer house price - £157,130
15% deposit - £23,569
Time taken to save 15% - 3 Years and 8 Months
Amount spent on rent while saving 15% - £16,192
Time taken to save 5% under Help To Buy - 1 Years and 3 Months
Time saved - 2 Years and 5 Months
Rent saved - £10,672

Social housing lets in Birmingham slump as people get trapped in system

Data for Dudley
Average monthly take home pay - £1,509.68
Average rent price - £282.00
Living costs - £583.75
Disposable income - £643.93
Average first time buyer house price - £146,334
15% deposit - £21,950
Time taken to save 15% - 2 Years and 11 Months
Amount spent on rent while saving 15% - £9,870
Time taken to save 5% under Help To Buy - 12 Months
Time saved - 1 Years and 11 Months
Rent saved - £6,486
Below, did you know about this major mortgage benefit?

 

Data for Wolverhampton
Average monthly take home pay - £1,509.68
Average rent price - £325.00
Living costs - 581.44
Disposable income - £603.24
Average first time buyer house price - £125,928
15% deposit - £18,889
Time taken to save 15% - 2 Years and 8 Months
Amount spent on rent while saving 15% - £10,400
Time taken to save 5% under Help To Buy - 11 Months

Time saved - 1 Years and 9 Months
Rent saved - £6,825

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