A growing divide between renters and homeowners is placing mounting pressure on first-time buyer aspirations and long-term financial resilience, according to the latest English Housing Survey, with the data offering clear warning signals for brokers advising clients on affordability and deposit readiness.

The government’s long-running English Housing Survey, published today, paints a sobering picture of affordability in the private rented sector.

More than seven in ten (71%) of private renters in the bottom two income quintiles now spend over 30% of their gross household income on rent, a commonly accepted threshold for housing stress. That compares to 42% of social renters and just 33% of mortgagors.

In London, the picture is starker still: 96% of low-income private renters in the capital spend more than 30% of their income on rent, highlighting an unsustainable dynamic in one of the UK’s key housing markets.

EYE-WATERING

Sarah Coles, head of personal finance at Hargreaves Lansdown, said: “The eye-watering cost of rent is devouring huge chunks of people’s income, making it incredibly difficult to build a deposit – it’s no wonder millions of people risk being stuck in the rental trap.

“Private renters spend more on their housing costs than any other group, and because they tend to be on lower average incomes, it takes a punishingly large proportion of their cash each month.

“Younger renters face a mountain to climb – and in London, they’re spending an average of 46% of their income on rent.”

ARREARS IN DECLINE

While arrears have declined – with 95% of private renters saying they remained up to date on rent in 2023–24 – and savings levels have improved over the past decade, the figures remain low in absolute terms. Only 52% of private renters report having any savings at all, compared with 33% ten years ago.

Coles added that even when renters do manage to save, the amounts are modest.

“Separate figures from the HL Savings and Resilience Barometer show that, on average, private renters are only able to put away 2.7% of their income. It means every penny saved needs to work harder. If they qualify for the Lifetime ISA, it’s well worth considering – the government’s 25% boost can be a vital step onto the property ladder.”

AFFORDABILITY CONVERSIONS

For mortgage brokers, the challenge lies in supporting clients through complex affordability conversations – especially those navigating both rising rents and stagnating wages. This dual strain is particularly acute among younger clients and prospective first-time buyers.

The report also flags an issue looming further down the timeline: housing costs in retirement.

As homeownership rates fall among younger generations, more people are expected to rent into later life, placing fresh strain on retirement adequacy.

SHIFTING RETIREMENT REALITY

Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, warns: “Our retirement reality is shifting. While many dream of having paid off their mortgage by retirement, an increasing number are still renting.

“The latest data shows retired renters spend 38% of their income on housing — double the proportion seen among mortgaged retirees.

“It’s an issue that isn’t spoken about often enough and it has a major impact on how much people need to save. Just 15% of renters are on track for a moderate retirement income, compared to 47% of homeowners.”