Just imagine if you are a tenant for a minute. You can see property prices are at a level that if you were to go and get a mortgage it would be cheaper to buy than to rent. This is the case for 84% of all areas in the UK.
So you go to your local bank and they say:
Okay a bit of a problem but you will ask my parents for a loan. So your parents gift you a nice amount of money and then the bank says:
“sorry, you must have earned the deposit”
So you go to a mortgage broker who knows which lenders do not ask too many questions about the source of the deposit or knows a lender or two who do not mind a gifted deposit but the broker says:
But the mortgage broker says they know of a lender who requires a 20% deposit and will charge you 7% interest rate on a repayment only basis and you say:
That is how first time buyers must feel. They are closed out. Unless you have wads of cash in your bank saved up from your salary and a 25% deposit you simply cannot benefit from the fact it is cheaper to buy than to rent.
So what is happening? Well rent is going through the roof. This is all good for buy to let landlords but there are also others who are noticing this: