With interest rates at all-time lows (bordering on negative rates), house prices are being pushed to record levels to the detriment of first-time buyers. They need a mortgage to cover on average 7.8 times their annual earnings, that figure compares to around 3.5 in the early 1990s.

But could all this be good for the rental market?

Research shows that would-be first-time buyers are finding it increasingly difficult to secure a home, and the economic effects of the Covid pandemic are making it even worse. Recent figures show that around 22% of aspiring first time buyers in the UK are still living with parents, and a good proportion of those believe they will have to do so for five years or more to save enough for a house deposit.

If it’s any consolation for those seeking ownership, the situation in the United States is probably worse. High demand, low supply and low mortgage rates have also driven up home prices to historic highs during this summer.

One investor landlord who invests in multiple family housing, Grant Cardone, is quoted in a recent Yahoo Finance article entitled The US will ‘become a renter nation’, as saying:

“Home-ownership is still dead in this country (United States) because the only people that are buying homes right now are people that have equity, great credit and a job… We’re going to become a renter nation in this country… Renting will become the economic choice and the desirable choice again…”

In the United States, currently for every $1,000 price increase, some 150,000 potential buyers are priced out of a home purchase, keeping them in the rental market.

One glimmer of hope for UK hopefuls is the Prime Minister’s statement recently that he wants to repeat the Thatcher home buying revolution, to turn “generation rent into generation buy”. Would new state-backed 95% mortgages help to get struggling homebuyers on to the housing ladder?

Despite the Prime Minister’s enthusiasm for such a scheme, he failed to mention in his speech to the Conservation Party conference how this would actually be achieved. Before the Covid crisis large mortgages with a five per cent deposit were available to those with sufficient savings, but since Covid hit, most of the major lenders, including the likes of Santander and HSBC, have simply pulled out, with virtually all of these deals cancelled until further notice. Even the few 90 per cent loan-to-value deals still available require stringent financial health checks.

Those getting a foot on the first rug of the housing ladder have moved way up in the age brackets, with home ownership even among those aged 35-44 having plunged, according to the Office of National Statistics (ONS) – its a fact that now adults in their mid-30s to mid-40s are three times more likely to rent than 20 years ago

Before the pandemic rising house prices and sluggish wage growth had left many middle-aged people priced out, but now with Covid it’s looking even more likely that people will have to rent for much longer, some with no choice but to become life long renters.

In American as here, renters have higher rates of unemployment, less savings for a down payment and consequently lower credit scores than they did before the pandemic. Renters are now more likely to fall behind on rent payments and more likely than owners to lose their jobs during the pandemic, taking them even further away from ownership.

There is little doubt that renters of today will suffer more hardship that those – mainly the baby boomer germination of over 65s, who were lucky to find it relatively easy to achieve ownership early on.

According to some research by The Royal London insurance company, homeowners without a mortgage can expect to maintain their living standards on a pension pot of about £260,000, while someone who rents privately would need almost double this, or about £445,000.

So for the one-third or people renting now who find this an attractive proposition, especially as the Covid crisis has had the effect of reducing rent levels, the prospects for them in older age are not as attractive. However, there are some advantages for older people renting, such reduced maintenance responsibilities and costs at a time when people could find it harder to maintain their home.

Finally, in America, to emphasise the difficulty for renters, says Cardone: “Homeownership is being driven by the upper class … You need a job that is secure, they’re [the banks] going to look at how you actually went through March, April, May and June with your job. If that was even slightly suspect, you’re not gonna get a home loan… You need a better credit score than you needed before Covid, and you need to secure a job.”


  1. What is a “multiple family home”?

    Will the UK become a rental only country?
    Probably not, because the public will vote for politicians who promise to enable home ownership.
    House prices are based on political policies and choices. The government chooses how it manages house price levels. It’s NOT a free market.


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