By James Lockett

Research from national UK estate agent, Keller Williams UK, has found that the ability to secure a mortgage with a five per cent deposit should reduce the time to save by over two years for some buyers across the UK property market.

Keller Williams UK analysed the current average house price across each area of the market, what this would require for both a 15% and 5% deposit, and how many months of net monthly income was required to save each deposit. 

Benefit to British Homebuyers

The research shows that across Britain, it would currently require the average homebuyer to stump up 18 months of earnings (£2,105) in order to accumulate the £37,998 required for a 15% deposit on the current average house price of £253,323. 

In contrast, a 5% deposit of just £12,666 would only require them to place six months earnings as a mortgage deposit, reducing the number of months required to save by a whole year.

By Region

The biggest benefit to homebuyers looking to utilise the 95% Government backed mortgage will be in London. With the average homebuyer earning £2,723, it currently requires 27 months of income to place a 15% deposit on the current average house price of £496,269. However, the ability to place just a 5% deposit means the income required reduces to just 9 months, a reduction of 18 months.

The South East and South West will also see some of the biggest reductions in the monthly earnings required to place a deposit, with both reducing by 15 months. The East of England (14), East Midlands (11), West Midlands (11), Wales (10), Yorkshire and the Humber (10) and North West (10) will also see a double digit reduction in the number of months income required to place a deposit. 

Biggest Reductions in Britain

With London home to the largest regional reduction, it’s no surprise that the capital also accounts for some of the biggest reductions at local authority level. Currently, the average buyer in Westminster is required to place 39 months of average earnings to cover a 15% deposit on the average house price of £1,000,650. A five per cent deposit would see this required earnings reduce by over two years (26 months). 

Camden (26), Haringey (25), Islington and Hackney (24) would also see the monthly earnings required to place a deposit reduce by more than two years. 

Outside of London, Tandridge would see the average monthly earnings required to place a deposit fall by 12 months when comparing the requirement of a five per cent deposit to that of a 15% deposit, as would Epsom and Ewell. 

CEO of Keller Williams UK, Ben Taylor, commented:

“While a stamp duty saving is currently a nice cherry on top for many homebuyers, the saving made pales in comparison to the initial financial hurdle of a mortgage deposit. So the ability to secure a Government backed mortgage with just a five per cent deposit should significantly boost buyer sentiment across the market. 

It’s not just the sum required to take that first step onto the ladder that will see a notable reduction, but also the time it requires many to amass this sum. With aspirational homebuyers able to get on the ladder for less and at greater speed, a continued stream of buyer interest should keep the housing market buoyant from both a transaction and house price growth perspective, to say the least.”

Table shows the current average house price in each area, the 15% and 5% deposit requirement, the average net monthly income and the months income required to accumulate each deposit
Location	AveHP – Feb 2021	15% deposit	5% deposit	Average NET salary per month	Months earnings required for 15% deposit	Months earnings required for 5% deposit	Difference in months 15% vs 5% earnings required
London	£496,269	£74,440	£24,813	£2,723	27	9	18
South East	£345,075	£51,761	£17,254	£2,291	23	8	15
South West	£279,242	£41,886	£13,962	£1,892	22	7	15
East of England	£306,346	£45,952	£15,317	£2,182	21	7	14
East Midlands	£213,967	£32,095	£10,698	£1,946	16	5	11
West Midlands Region	£215,451	£32,318	£10,773	£1,972	16	5	11
Wales	£179,861	£26,979	£8,993	£1,824	15	5	10
Yorkshire and The Humber	£182,220	£27,333	£9,111	£1,897	14	5	10
North West	£184,351	£27,653	£9,218	£1,928	14	5	10
Scotland	£161,529	£24,229	£8,076	£2,004	12	4	8
North East	£138,370	£20,755	£6,918	£1,844	11	4	8
England	£268,291	£40,244	£13,415	£2,132	19	6	13
Great Britain	£253,323	£37,998	£12,666	£2,105	18	6	12
Sources	Gov.uk – UK House Price Index	15% of Average House Price	5% of Average House Price	Net wage sourced from ONS – Employee earnings in the UK	15% deposit/Wage	5% deposit/Wage
Table shows the areas to see the biggest reduction in the number of months earnings required to save between a 15% and 5% mortgage deposit
Location	AveHP – Feb 2021	15% deposit	5% deposit	Average NET salary per month	Months earnings required for 15% deposit	Months earnings required for 5% deposit	Difference in months 15% vs 5% earnings required
City of Westminster	£1,000,560	£150,084	£50,028	£3,807	39	13	26
Camden	£822,936	£123,440	£41,147	£3,227	38	13	26
Haringey	£567,352	£85,103	£28,368	£2,294	37	12	25
Islington	£700,791	£105,119	£35,040	£2,908	36	12	24
Hackney	£585,760	£87,864	£29,288	£2,482	35	12	24
Brent	£502,264	£75,340	£25,113	£2,196	34	11	23
Kensington and Chelsea	£1,220,511	£183,077	£61,026	£5,353	34	11	23
Barnet	£531,887	£79,783	£26,594	£2,478	32	11	21
Tandridge	£489,702	£73,455	£24,485	£2,312	32	11	21
Epsom and Ewell	£485,861	£72,879	£24,293	£2,301	32	11	21
Sources	Gov.uk – UK House Price Index	15% of Average House Price	5% of Average House Price	Net wage sourced from ONS – Employee earnings in the UK	15% deposit/Wage	5% deposit/Wage

NOTE:

   Survey carried out via consumer research platform Find Out Now

●        Keller Williams are the largest real estate business in the world with 190,000 agents and having rapidly expanded in recent years to 50 countries – founded in Austin, Texas by Gary Keller, Executive Chairman

●        Home sales via Keller Williams topped one million transactions last year

●        Keller Williams UK operates from 12 regional market centres across the country comprising over 300 estate agents, adding substantial numbers of new agents each month

●        Ben Taylor is the CEO of Keller Williams UK and a major shareholder in the region and many of its market centres. He is formerly the Managing Director of John D Wood, a Countrywide PLC brand