A deposit-free mortgage specifically designed for current tenants has been introduced by a UK building society.

While a handful of other no deposit offers are available, they all require the financial support of family or friends.

Skipton Building Society says while its business requires 12 months of on-time rent payments and a good credit history, it doesn’t need a guarantor.

A campaign group said while no-down-payment deals could help buyers, the lack of affordable homes remains a major problem.

Generation Rent, which champions private renters, says the lack of properties in first-time buyers’ budgets remains a major obstacle for those struggling to climb the property ladder.

First-time buyers face an uphill battle. Soaring rents have made saving for a down payment increasingly difficult, while the government’s flagship Help Buy program, which has run for more than a decade and has helped more than a quarter million first-time buyers, is no longer open.

Since the financial crisis of 2008, very few 100% loan-to-value mortgages are available. There are currently 15 other no deposit products on the market, accounting for just under 0.3% of the UK market, according to financial data company Moneyfacts.

Skipton Building Society’s new five-year fixed-rate mortgage differs from existing products in that it does not require a guarantor and is intended only for people who are currently renting a property. However, at 5.49%, the interest rate is more expensive than the average five-year fix of 5%.

Skipton, the UK’s fourth largest building society, says it has identified a “niche in the market”.

Stuart Haire, the company’s chief executive, told the BBC that ‘there hasn’t been a solution for them until now [renters] to buy a property due to a lack of savings or access to family wealth”.

David is renting in North Yorkshire with his partner and new baby. “With rental prices, it’s really difficult to get that deposit together.” admits David. “In an ideal world we would buy, but it’s not possible.”

“If I can prove that I’ve paid rent for the last 10 years of my life, why can’t I get a mortgage?”

And David is not alone. Mortgage expert Andrew Montlake believes there is demand for a product like this, which offers another option for people stuck in the rental market. He believes it will “help some people get up the property ladder.”

But many renters who dream of owning their own home will still not be able to get their hands on one of these mortgages. Even if someone has a good rental history for 12 consecutive months, they still have to pass credit and affordability checks, which excludes many with CCJs or poor credit.

It is also currently difficult to find an affordable property to rent to build this track record. According to Zoopla, demand for rental housing has increased by more than 50% above normal levels.

“It’s not necessarily going to help all people who are looking to buy a home for the first time if there aren’t more homes available for purchase,” says Generation Rent’s Will Barber Taylor.

But, he adds, “it would have to be in combination with other factors to make it effective”.

Under the government’s Help-to-Buy scheme, the Treasury awarded homebuyers between 5% and 20% of the cost of a new home built, and up to 40% in London. Between April 2013 and September 2022, 375,654 homes were purchased with a Help-to-Buy loan.

The program closed to new applicants in October 2022, but there are rumors that something similar could be reintroduced. Housing Secretary Michael Gove said any measures to support first-time buyers were “under review”.

But a surge in zero-deposit mortgages may not be welcomed by everyone, as riskier mortgages with high loan-to-value ratios were a major cause of the 2008 financial crash.

“I know you’re obviously going to get comparisons to what happened last time (2008),” says Mr. Montlake. “But this was an underdog mortgage market, where lenders were more interested in volume than quality.”

“The world is very different now,” he says, adding that his opinion has changed over the past 15 years as long as the 100% mortgage loan is “reasonably” underwritten.

A deposit-free mortgage specifically designed for current tenants has been introduced by a UK building society.

While a handful of other no deposit offers are available, they all require the financial support of family or friends.

Skipton Building Society says while its business requires 12 months of on-time rent payments and a good credit history, it doesn’t need a guarantor.

A campaign group said while no-down-payment deals could help buyers, the lack of affordable homes remains a major problem.

Generation Rent, which champions private renters, says the lack of properties in first-time buyers’ budgets remains a major obstacle for those struggling to climb the property ladder.

First-time buyers face an uphill battle. Soaring rents have made saving for a down payment increasingly difficult, while the government’s flagship Help Buy program, which has run for more than a decade and has helped more than a quarter million first-time buyers, is no longer open.

Since the financial crisis of 2008, very few 100% loan-to-value mortgages are available. There are currently 15 other no deposit products on the market, accounting for just under 0.3% of the UK market, according to financial data company Moneyfacts.

Skipton Building Society’s new five-year fixed-rate mortgage differs from existing products in that it does not require a guarantor and is intended only for people who are currently renting a property. However, at 5.49%, the interest rate is more expensive than the average five-year fix of 5%.

Skipton, the UK’s fourth largest building society, says it has identified a “niche in the market”.

Stuart Haire, the company’s chief executive, told the BBC that ‘there hasn’t been a solution for them until now [renters] to buy a property due to a lack of savings or access to family wealth”.

David is renting in North Yorkshire with his partner and new baby. “With rental prices, it’s really difficult to get that deposit together.” admits David. “In an ideal world we would buy, but it’s not possible.”

“If I can prove that I’ve paid rent for the last 10 years of my life, why can’t I get a mortgage?”

And David is not alone. Mortgage expert Andrew Montlake believes there is demand for a product like this, which offers another option for people stuck in the rental market. He believes it will “help some people get up the property ladder.”

But many renters who dream of owning their own home will still not be able to get their hands on one of these mortgages. Even if someone has a good rental history for 12 consecutive months, they still have to pass credit and affordability checks, which excludes many with CCJs or poor credit.

It is also currently difficult to find an affordable property to rent to build this track record. According to Zoopla, demand for rental housing has increased by more than 50% above normal levels.

“It’s not necessarily going to help all people who are looking to buy a home for the first time if there aren’t more homes available for purchase,” says Generation Rent’s Will Barber Taylor.

But, he adds, “it would have to be in combination with other factors to make it effective”.

Under the government’s Help-to-Buy scheme, the Treasury awarded homebuyers between 5% and 20% of the cost of a new home built, and up to 40% in London. Between April 2013 and September 2022, 375,654 homes were purchased with a Help-to-Buy loan.

The program closed to new applicants in October 2022, but there are rumors that something similar could be reintroduced. Housing Secretary Michael Gove said any measures to support first-time buyers were “under review”.

But a surge in zero-deposit mortgages may not be welcomed by everyone, as riskier mortgages with high loan-to-value ratios were a major cause of the 2008 financial crash.

“I know you’re obviously going to get comparisons to what happened last time (2008),” says Mr. Montlake. “But this was an underdog mortgage market, where lenders were more interested in volume than quality.”

“The world is very different now,” he says, adding that his opinion has changed over the past 15 years as long as the 100% mortgage loan is “reasonably” underwritten.