Millions of future first-time buyers are waiting to take their first step on the housing ladder with almost a third of tenants having investigated whether they could afford to buy a home in the past year.

Analysis by mortgage market specialist Pegasus Insight suggests that as many as six million people renting privately could move into homeownership in the coming years, despite ongoing affordability pressures.

Its latest Tenant Trends report found that 29% of renters have researched the cost of buying, while many are also saving towards a deposit.

Interest is strongest among younger tenants, with 43% of those aged 25 to 34 exploring affordability and 34% searching for properties.

AFFORDABILITY CHECKS

In central London, 39% of tenants have run affordability checks, 20% have viewed homes and 21% have spoken to mortgage advisers.

Longer-term intentions also point to a significant pipeline: more than half of tenants (51%) say they plan to buy eventually, though this falls sharply with age. Two-thirds (68%) of 18–34 year olds expect to purchase their own home, compared with just 15% of renters over 55.

READY TO TRANSITION

Mark Long, founder and director of Pegasus Insight, said: “Too often, tenants are seen as a captive audience for landlords rather than tomorrow’s first-time buyers.

“But the fact that nearly a third are actively researching mortgage affordability shows there is a sizeable group getting ready to transition into homeownership.

“With close to 20 million people living in the private rented sector, that equates to as many as six million potential new mortgage customers.”

“These are future borrowers who will need guidance.”

And he added: “For brokers and lenders, this is a clear signal: these are future borrowers who will need guidance, accessible products and support to bridge the gap between renting and buying.

“One of the most important steps the market can take is to evolve affordability assessments. At present, many would-be buyers find themselves excluded, even if they have a proven track record of paying rent at levels equivalent to – or greater than – the mortgage they would be taking on.”

He said that recent moves by the Financial Conduct Authority to relax guidance on affordability could open the way for lenders to take rental histories into account, potentially widening access to mortgage finance.