With house prices reaching levels far beyond the means of many single-income earners—and even joint applicants in pricey southern hotspots.
New data from April Mortgages highlights the growing gulf between buyers’ incomes and the cost of homeownership, and experts suggest this situation may accelerate further expansion of the rental market, potentially offering lucrative opportunities for landlords and investors.
Soaring deposits and challenging affordability
In towns like St Albans, where the average property price now hovers around £591,000, a single earner could need more than £400,000 just for a deposit if they’re limited to borrowing 4.5 times their salary. The same affordability crunch is apparent in London, Guildford, Cambridge, and Oxford, underscoring a widening divide between the north and south. While couples have a marginal advantage thanks to two incomes, they’re still facing daunting deposit requirements, often well over £80,000, in high-demand southern areas.
Rental market poised to benefit
These prohibitive entry costs—and stringent lending criteria from banks—are leaving more would-be buyers dependent on the rental sector for longer. Landlords and investors stand to profit from this sustained demand, particularly in regions where lower purchase prices combine with high tenant interest to yield more favourable returns.
Tackling the affordability crisis
April Mortgages, known for providing loans of up to six times a borrower’s annual income, believes that longer-term fixed-rate products (spanning 10 or 15 years) could help some buyers qualify where strict criteria would otherwise lock them out. Traditional lenders have tightened affordability rules to shield borrowers from future rate hikes, but in practice, these measures often impede those without hefty deposits.
“The speed at which house prices are rising is leaving many prospective buyers unable to afford a home,” an April Mortgages spokesperson said. “Longer-term lending solutions can boost affordability for prospective homeowners who might otherwise remain tenants indefinitely.”
For property investors, recent trends appear to support the view that rental demand will continue to grow, especially in areas where the price-to-income ratio remains too high for typical buyers to make the leap onto the property ladder.
