Almost half of Britain’s 8.3 million potential first-time buyers earn enough to qualify for a mortgage on a starter home – but just 15 percent have saved enough for even a modest deposit, according to new research from the Resolution Foundation.
The think tank’s report, published today, found that the post-financial-crisis tightening of mortgage lending rules has had an uneven impact, with low-to-middle income households seeing three times the fall in mortgage access compared to higher earners.
Deposit barrier outweighs income requirements
The Resolution Foundation analysis identifies income-based lending rules as less of a barrier than widely assumed. Nearly half of potential first-time buyers would pass standard income requirements for a starter home mortgage. However, just 15 percent have accumulated enough savings to cover a 5 percent deposit.
This follows Landlord Knowledge’s report on student loan costs, which found graduates lose around £2,000 a year in potential deposit savings due to repayment obligations – highlighting the cumulative barriers facing young renters trying to exit the private rented sector.
The Foundation warned that a blanket loosening of mortgage regulations could prove counterproductive. Research shows that expanding mortgage credit when housing supply is constrained tends to push prices higher rather than increase homeownership rates.
Targeted equity loan scheme proposed
Instead of regulatory loosening, the think tank proposes a Starter Deposit equity loan scheme that would provide first-time buyers with a 5 percent deposit on a starter home. The more targeted approach would cost the government up to £190 million a year against fiscal rules – significantly less than previous Help to Buy programmes.
Since the closure of Help to Buy, potential first-time buyers have had fewer routes onto the housing ladder. The growing affordability gap has kept many trapped in the rental sector, sustaining demand for private landlords even as supply contracts.
The report comes as the number of mortgagors among low-to-middle income households has fallen sharply since the financial crisis, with many would-be buyers remaining in private rented accommodation for longer periods. This structural shift has been a key factor supporting rental demand despite rising rents.
What this means for landlords
- If you’re considering portfolio changes: Sustained deposit barriers suggest rental demand will remain strong among working households who can afford rent but cannot save for ownership.
- Watch for: Any government action on the Starter Deposit proposal – targeted schemes could accelerate tenant exits in areas with affordable starter homes.
- Bottom line: The rental sector’s tenant pool includes millions of earners locked out of buying by savings constraints, not income – a structural factor likely to persist.
Editor’s view
The numbers tell a familiar story: renters are not renting by choice but by circumstance. For landlords, this creates a stable tenant base – but also raises questions about how long policy will tolerate a system where nearly half of potential buyers earn enough but cannot save enough. Any serious intervention would shift the calculus.
Author: Editorial Team – UK landlord & buy-to-let news, policy, and finance
Published: 26 March 2026
Sources: Resolution Foundation
Related reading: Student loans cost aspiring buyers £2,000 a year in deposit savings
