Why is saving up for a home in the UK so hard?

If you’re struggling to save for a house deposit (or mortgage deposit) and are feeling deflated, you’re not alone. These days, it takes the average single person in the UK at least 10 years to save up for a deposit for a detached home – so you are possibly already on track!

With skyrocketing house prices, England has been described as ‘the most difficult place to find a home in the developed world’ by the Home Builders Federation.  A survey by Zoopla also found that 42% of people aged 18-39 have abandoned the idea of owning a home altogether.

But we’re here to keep the dream alive with some expert top tips – from making your money work harder to explaining more about shared ownership schemes – buying a home to call your own might be closer than you think!

How much will I need to save?

Over the past 12 months, the average price for a house in the Docklands (East London) is £545,881. For a good-size deposit (of 15%), you’ll be looking at £81,882. Now, that’s a lot of savings!

Unfortunately, owning a home outright before age 30 is more difficult than ever. But let’s be honest – completely cutting back on coffee or meals out isn’t going to speed up the process much.

How to start saving for a house deposit today

1. Make your money work harder with savings accounts

Lifetime ISAs

Savings accounts, such as a Lifetime ISAs (LISA) allow you to rack up a lot of tax-free interest. If you’re aged 18 – 40 and saving for your first home, a LISA is well-worth considering. You can put in up to £4,000 each year, and the government adds a 25% bonus (of up to £1,000 annually). This bonus doesn’t count toward your £20,000 ISA limit (which means you can save an extra £16,000 in other types of ISAs!)

Keep in mind some restrictions. The home value can’t exceed £450,000 and you must use your savings for a house deposit (or you could be hit with a 25% penalty on all withdrawals that occur before aged 60).

Stock & Shares ISA

For a quicker (albeit riskier) return, you could open up both a cash LISA and a Stocks & Shares ISA. Save up to £4,000 a year on each type of ISA and the state adds 25% on top. And in addition, you’ll be earning tax-free interest on whatever you save. However, your capital is at risk if you choose to go down this route, due to the unpredictability of stocks and share value.

Maximum money the government could pay you annually = £2,000

Ready to get started? All you need is £1 to get the ball rolling. For more information, make sure you take a look at Martin Lewis’s guide to Lifetime ISAs.

2. Buy with someone else

This is easier said than done, but if you’re lucky enough to have already met your partner,  consider saving up together.

Remember, you don’t have to buy with a partner. Buying with a close friend is becoming more popular – 44% of 18–24-year-olds who don’t yet own a home said they’d like to buy one with a friend. You could consider many developments with 2 or 3-bedroom homes such as Cavalier Court- enough space for two friends!

3.  Side hustle

Consider starting a side hustle online.  You can get started if you’ve got access to a laptop/smartphone and the internet. There are many different avenues you could try out, such as buying/selling on Vinted, Dropshipping or online tutoring. Even just an extra few hundred a month will help you save significantly quicker. Just make sure it doesn’t interfere with your work-life balance!

For more ideas, take a look at Investopedia’s How to Start a Side Hustle guide.

4.  Pay yourself

Set up an automated payment from your bank account to a dedicated savings account. About £200 – £400 is a good amount to aim for (if possible) and try not to dip into it unless you absolutely have to. This way, any money you do have left over once you’ve already paid yourself, you can do with as you please (and buy all the cappuccinos you want!)

5. Buy a Shared Ownership home

If you haven’t heard of Shared Ownerships before, it could be a super cost-effective option for you. On average, you’ll only need 25% of the cost of a standard deposit.

Let’s take our modern apartments at East River Wharf, in the Docklands, for example:

For a stunning 1-bed apartment, all you’d need is a deposit of just under £5,000. This enables you to purchase a property up to the value of £387,500. If you’re saving up just a few hundred each month, you’ll get to £5,000 in around just 18 months!

Here’s just a few of the amazing features you can expect from Shared Ownership properties:

• Homes that are move in ready, just bring yourself!
• A secure and robust warranty to ensure everything is as it should be
• Modern and energy efficient appliances to help keep bills to a minimum
• Fresh and clean interiors, ready for you to add your own decorative flair
• The ability to buy more of your home as and when suits you through staircasing.

Need more information? Take a look at our Shared Ownerships 101 guide to learn exactly how it works.

Sound too good to be true? Let’s debunk the Shared Ownership myths.

Key takeaways

Here’s a quick recap of how you can get the ball rolling today:

• Make your money work harder with LISAs
• Buy with a partner or close friend
• Start a side hustle
• Pay yourself and start saving on a monthly basis
• Buy a Shared Ownership home and get on the property ladder sooner than you thought possible

Start saving!

So, you should now have a pretty good idea of how you can save for a house deposit quicker.  If you’re considering shared ownership, use our property finder to look for your dream home. 

To check your affordability just enter the property value and how much deposit you can save into our Shared Ownership Affordability Calculator. Then voila! You’ll get an estimation of your monthly costs.