Low-paid key workers on the frontline of the Covid-19 pandemic would not be able to afford to buy the average priced home in 98% of Great Britain, an exclusive Guardian analysis has found.
Years of rising prices have put homeownership out of reach of many key workers, who have also experienced pay freezes and had to channel their wages into paying high private rents, rather than being able to save for a deposit.
The Guardian’s analysis, which was based on the sums needed for a 90% mortgage, found that a nurse on the median wage of £33,920 a year would not be able to raise a big enough mortgage to buy the median-priced property in almost three-quarters of local authorities nationwide.
A nurse with a partner on the average wage would be locked out of the market in more than a fifth of areas.
Senior care workers, who are typically private employees rather than public sector workers, would face more of a struggle to raise enough money to buy.
According to the Office for National Statistics, the median salary for a senior care worker in the UK stood at £21,243 in 2020.
Based on these earnings, with a 10% deposit to put down, a senior care worker would be able to afford the average priced property in just six council areas in Great Britain, locking them out of 98% of areas.
If this individual applied for a joint mortgage with a partner on the average UK salary of £31,461, the couple would be unable to afford the average property in four-in-10 local authorities across Britain.
The analysis, which was carried out using affordability calculations from the UK’s biggest building society, Nationwide, looked at the maximum mortgage that could be raised with a 10% deposit.
When the pandemic hit, lenders withdrew low deposit loans, and for a while 90% mortgages were difficult to find.
Banks and building societies are now returning to the market, and the recent budget brought news of a government guarantee to support lending at 95%.
However, borrowers will still need to show that they can afford monthly repayments before they can get a loan, and those on low salaries will struggle to pass lenders’ checks.
Dan Wilson Craw, deputy director of campaign group Generation Rent, said: “Raising a deposit is just one half of the equation; you must also be able to afford the monthly repayments, and a 95% mortgage comes with a higher interest rate.”
The Guardian looked at a range of jobs that have been vital during the Covid pandemic and used the median salaries for them and median property prices in each local council area in the year to September 2020, the latest available figures.
A postal worker with a partner on the average wage would be priced out in more than one-third of local authorities. Bus drivers fare slightly better, however, even within a couple, they are unable to afford the average property in 31% of local authorities.
Even the highest-earning individual covered by the analysis – a secondary school teacher earning £40,881 – would be unable to afford a typical property in almost a fifth of council areas.
The findings come after NHS workers were recently offered a 1% pay rise by Boris Johnson, were condemned as a “disgrace” by the Labour party. Scottish NHS workers will be offered a 4% increase.
But while the Guardian analysis shows large swathes of the country to be unaffordable for couples, those trying to buy alone fare much worse, at a time when a growing number of households are headed by a single person.
There are an estimated 2.9 million lone-parent families in the UK while 1.4 million people aged between 25 and 44 live alone according to the ONS which, combined, accounts for one-in-six households.
A postal worker earning the median income of £24,028 would be able to secure a mortgage on the average-priced home in just 13 local authorities, a bus driver on a single wage of £27,191 would be priced out of nine-out-of-10 council areas while a teacher could not afford a mortgage in 60% of areas across Britain according to the Nationwide affordability calculator.
David Hollingworth of mortgage broker L&C said that although lenders could typically offer borrowers four or five times their income, “high house prices can leave buyers facing a shortfall”.
“That’s especially likely for single applicants and is one of the reasons that so many have come to rely on the ‘bank of mum and dad’ to boost their deposit, or even be a joint borrower to add their income into the equation.”
There are a small number of mortgage deals targeted at key workers, but the government’s Key Worker Living Programme to help them buy affordable housing was scrapped in 2019.
Other than the defence forces, key workers have only been able to use broader schemes since then, such as help to buy and shared ownership.
A proposed Starter Home initiative, dating back to the David Cameron’s time as prime minister, never came about.
A new scheme called First Homes, designed to provide a 30% discount on new-builds (rising to 50% in certain areas), may be open to key workers who already own homes and need to move, alongside first-time buyers and councils will be allowed to prioritise keyworkers in their area. However the initiative has been on ice since August last year.
A spokesperson for the Ministry for Housing, Community and Local Government said the government was “providing more support than ever before to help people on to the housing ladder”.
“First Homes, Shared Ownership, our £12bn investment in affordable housing, the Help to Buy scheme, and the new mortgage guarantee scheme will help many more people get the keys to their own home.”
