First-time buyers spend thousands on rent before buying as prices and deposits bite

First-time buyers now spend an average of £163,047 on rent before purchasing a home, 40% more than a decade ago, according to specialist mortgage lender Perenna. The figure comes as average monthly rents rose 5.7% in the year to August, to £1,348, according to official data. With house prices climbing to about £270,000 in July, buyers face a double squeeze: rent eats into savings and a larger price tag for the eventual purchase.

The total amount paid in rent before acquiring a home today is enough to put down roughly a 60% deposit on the average property. A 10% deposit on the current average home would be about £27,000, underscoring how rent costs can delay or complicate saving for a first move. Perenna notes that first-time buyers have rented for about 12.8 years on average, up from 11.4 years a decade ago, assuming they start renting at age 21. The shift reflects broader affordability pressures in the housing market and the way mortgage rules interact with earnings and debt.

The latest rent picture shows wide regional variation. Wales posted the sharpest year-over-year rise at 7.8% to £811 a month, while England posted the highest average monthly rent at £1,403. Scotland's rents rose 3.5% to £1,002, and London remains the most expensive region overall at £2,253 a month. The North East remains the least costly at £745 per month.

Colin Bell, founder of Perenna, said there is a place for renting, but the current market structure contributes to a cycle where rising rents outpace savings and wage growth. He noted that rents do not build equity in the way mortgage payments do and often do not improve a renter’s credit profile, even as monthly costs climb higher than they would under a mortgage. Bell urged policymakers and lenders to explore solutions that help young people access homeownership without prolonging dependence on the private rental market, especially as prices continue to rise.

The rent story is echoed by campaign groups, who argue that protections against rapid rent increases are uneven across regions and levels of government. Ben Twomey, chief executive of Generation Rent, said homes are foundational to daily life, but rents continue to outpace wages, reducing households’ disposable income. He called for more robust protections, including devolved powers for Mayors to limit rent increases in their areas, to help stem the erosion of affordability for renters.

Some lenders are already testing pathways to ownership with lower deposits. Newcastle Building Society, for example, has launched a 2% deposit mortgage option, though such products typically carry higher interest rates and eligibility limits. In the meantime, affordability remains tethered to a mix of wage growth, deposit availability, and lenders’ risk appetites. Analysts say regulatory shifts announced by officials could loosen some underwriting rules, potentially widening access to low-deposit products for qualified borrowers, but critics say they may also raise default risk if not carefully calibrated.

The rent-and-buy dynamic is shaping market expectations. ONS data show rents continuing to push upward, even as some buyers face higher affordability hurdles created by elevated property values and tighter debt-to-income ratios. Real estate professionals say that the path to ownership for many first-time buyers will involve a combination of longer rental periods, targeted lender products, and policy tools designed to temper rental growth while expanding access to homeownership. The evolving landscape highlights the tension between an improving but expensive housing market and households’ ability to save for a first property.

Finally, the current environment places renewed emphasis on the role of policy in shaping housing affordability. Advocates argue for a more coordinated approach to rent regulation and mortgage access, along with initiatives that support deposits and lower monthly loads for first-time buyers. With house prices at elevated levels and rents continuing to climb, the coming months are likely to test how quickly lenders, lawmakers, and market participants can align to help households transition from renting to owning.