Skipton Building Society has announced it is launching the UK’s first 100% loan-to-value (LTV) mortgage aimed exclusively at renters.

The society has suggested that its new “track record mortgage” can hand a lifeline to tenants by helping them to break out of rental cycles and onto the property for the first time.

There are an estimated 4.6 million households renting privately across England, a figure more than double (112%) than there were in 2000. Rental research from Skipton has also revealed that eight in 10 tenants feel “trapped” in the rental cycle, paying rents that are higher than a mortgage which then prevents them saving a deposit to buy their own home. At the same time, house prices for first-time buyers have risen by an average of 18% in the last two years, an increase worth £39,680.

Skipton said the cost of living crisis has been cited as the main setback for renters, who are now saving less for a deposit than ever before, with two in five (41%) stating that house prices in their area are rising too quickly for them to keep up. More than one in three (35%) are also struggling to save due to increased rent – and are now having to find an extra £1,000 per year for their landlord.

“We need to tackle the UK’s housing affordability crisis to enable more people, especially renters who are trapped in renting cycles, to buy their first home,” commented CEO of home financing at Skipton, Charlotte Harrison.

“People trapped in renting is one of the UK’s biggest housing challenges, having a massive impact on the fabric of our society. With escalating rents and the cost of living squeeze further impacting people’s ability to save for a house deposit – it’s making it almost impossible for people get onto the property ladder.

“We recognise there’s a clear gap in the market for people who have a strong history of making rental payments over a period of time so can evidence affordability of a mortgage – but there is currently no solution for them to buy a property due to lack of savings or access to family wealth. It is time for a rethink on these massive barriers to homeownership, and we’re proud to take the lead on bringing to the market, solutions for such a massive social problem.”

Harrison also said the society’s new mortgage has been “carefully created” with the challenges facing renters in mind, together with the potential risks they may encounter in the future.

“In building our mortgage product with these challenges at the centre we’re ensuring considerations around negative equity have been fully taken into account,” she added.

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