Aldermore: 37% of self-employed renters do not believe they will ever buy

Jake Carter

July 19, 2021

More than a third (37%) of self-employed renters do not believe they will ever be able to buy, according to research conducted by Aldermore Bank.

One in five (20%) self-employed renters said they were more motivated to buy due to the lockdown experience and one quarter (25%) were actively saving for a deposit.

However, more than a quarter (28%) said saving for a deposit is more of a challenge now due to the financial impact of the pandemic and one in five (18%) had delayed their home buying timeline.

Despite more than a quarter (27%) of self-employed renters now seeking to improve their credit to boost their home buying chances, 14% said their credit score has been negatively impacted due to the pandemic.

More than a third (36%) of self employed renters say they feel buying a home is unobtainable for them right now.

While four in five (78%) self employed Brits believe owning a home is an important life step, nearly half (44%) think the home buying process is confusing.

Furthermore, 56% said mortgage lenders do not do enough to support the self-employed.

With only 14% of self-employed workers having consistent income month-to-month, many felt high street lenders did not give them a fair hearing when going through the application process.

The number one reason for a mortgage application rejection for the self employed was being self-employed, with 32% citing this.

Only 29% of self-employed home owners believed mortgage lenders fully understood their earning capabilities when they applied, with 50% thinking their lender only understood to a degree and 21% saying their mortgage lender did not understand their earning capabilities at all.

This has led to 64% of the self-employed believing mortgage lenders treat self-employed people worse than those who are employed with a regular salary.

Jon Cooper, head of mortgage distribution at Aldermore, said: “The UK is an entrepreneurial nation, and the growing self employed workforce is integral to our economy, so it is disappointing to see persistent barriers for them when seeking to secure a mortgage, which appears to have been exacerbated by the pandemic.

“The self employed need not despair, however, as the growth of specialist lenders has opened up an increasing number of options that can provide pathways to home ownership.

“Our research shows 52% of the self employed workers in the UK have seasonal or extremely variable income streams month to month, which may not fit the tick-box approach of many high street lenders, but specialist lenders can dig into the detail to understand complicated income streams ensuring the self employed have opportunities to get on the housing ladder.”

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