Comment: the cooling rental market and ongoing issues for renters
Dani Whitehead, chief marketing officer at Loqbox: “Zoopla has revealed that the rental market is cooling, with new tenancy costs rising at their slowest rate in nearly three years. Despite this, many tenants, particularly millennials (often dubbed ‘generation rent’), continue to face significant financial pressures, with rising living costs leaving little room for savings and making it even harder for renters to secure a mortgage and step onto the property ladder.
A major challenge facing renters is a lack of credit history. Unlike mortgage or credit card payments, rent and utility payments don’t currently help build credit scores, which puts people at a disadvantage when trying to access affordable financial products. This lack of credit visibility traps many in a vicious cycle, unable to qualify for better mortgage rates and remaining stuck in the rental market. This can feel a little unfair where would-be homeowners find themselves paying more in rent than they would in mortgage repayments in a month.
Fortunately, new tools allow renters to leverage their regular rent payments to build their credit histories. By improving their credit visibility, renters can increase their chances of securing a mortgage and breaking free from the rental cycle. A stronger credit history can also unlock access to better credit card rates or loans, making the use of credit more affordable.
For those aiming to step onto the property ladder, it is a good idea to develop a savings plan. While the prospect of saving for a first home can be intimidating, especially with rising living costs, it’s achievable with the right strategy. Start by researching how much you need to save based on average house prices in your desired area. Remember to budget for additional costs like legal fees, moving expenses, and renovations, which can add up quickly. Even small, consistent contributions can accumulate over time, bringing you closer to your goal.
Government initiatives like Lifetime ISAs and shared ownership schemes offer substantial support for first-time buyers, making it easier to accumulate the necessary deposit. By taking proactive steps today, renters can enhance their financial resilience and move closer to achieving home ownership.”