The new Track Record Mortgage requires borrowers to demonstrate a history of rental payments comparable to mortgage repayments for up to two years. This move comes as the number of first-time buyers declined by 35,200 last year compared to 2021 due to higher mortgage rates, according to UK Finance.

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

Charlotte Harrison, CEO of Home Financing at Skipton, said: “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.

“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 re-think on these massive barriers to home ownership, and we’re proud to take the lead on bringing to the market, solutions for such a massive social problem.

“This is why we’re introducing our Track Record Mortgage. It has been carefully created with the challenges generation rent is facing in mind, together with the potential risks and challenges they may encounter in the future too. In building our mortgage product with these challenges at the centre we’re ensuring considerations around negative equity have been fully taken into account.”

Skipton’s Track Record Mortgage product details:

• 5-year fixed rate product at 5.49% over a max term of 35 years
• Tenants can borrow over 95% up to 100% loan to value
• Available to tenants aged 21 and above
• Available for first time buyer purchases only
• Subject to affordability and credit score, plus evidence of a minimum of a 12-months good track record rental history

Charlotte Harrison

As a responsible lender, Skipton is ensuring the monthly mortgage payment for each applicant is not more than the average of their last six months rental costs that they have paid. For example, a tenant paying an average of £800 per month over the last six months will have a maximum monthly mortgage payment of £800

Example based on the average UK rent amount of £1,290 (applicant borrowing at 100% loan to value with an interest rate of 5.49% over a 35-year mortgage term) Skipton may lend them based on this monthly rent they’re used to paying up to £240,509 (but this is subject to criteria, credit score, affordability, and rental track record).

Ms Harrison added: “We know there isn’t one quick solution to addressing this huge societal challenge of tenants being trapped in renting cycles, with rents escalating faster than mortgage payments and the increasing costs of living, but doing nothing isn’t going to solve this UK housing issue. As a responsible lender, we need to be sensible with our approach for bringing this product to the market and ensure tenants don’t take on more than they can realistically afford.

“We know this product will not be able to help everyone and is only part of the solution for this group of people, but as a lender, we’re taking a stand to offer innovation in this space to help turn generation rent into generation buy.”