You’re paying eye-watering rent while house prices keep climbing. Saving for a deposit feels more like a fantasy than a plan. You’re not imagining it. The numbers can be really tough.

In 2025, the average UK first-time buyer deposit is around £61,000. In London, it’s over £125,000. Only 8% of people aged 25-34 can afford a 10% deposit. For most renters, the dream of owning a home feels totally out of reach.

That’s life for Generation Rent. You’re locked out of buying, stuck in expensive rentals and having deposit struggles in an economy that’s working against you.

This guide lays out the facts, breaks down your options, and shows you how to take back some control amid UK housing crisis deposit struggles. Including how a tax refund from RIFT could give your deposit savings a real boost.

The deposit struggle in 2025

Getting on the property ladder in 2025 is harder than ever. The average first-time buyer home now costs around £311,000, meaning a standard 20% deposit sits at about £61,000. In London, where house prices are steeper, first-time buyers are putting down closer to £125,000. And in some cases, even more.

That’s a massive gap when you consider the average savings among UK adults is just £16,000. And this drops hugely among people aged under 35.

Average savings in the UK by age

Age Average savings
18-24 £4,759
25-34 £9,357
35-44 £7,434
45-54 £13,318
55+ £27,949

Even a 10% deposit on a £250,000 home still means finding £25,000. And that’s before you even think about legal fees, surveys or moving costs, which can add another £3,000-£6,000.

The numbers just don’t add up. High rents swallow income, inflation drags down buying power and wages simply haven’t kept up. According to government data, only a small portion of first-time buyers manage to save more than 20%, and around 40% land somewhere between 10-19%.

If you’re trying to find out how to save for a deposit while renting, the truth is that it can be structurally unfair, never mind tough. The average deposit in the UK housing crisis is really hard to save for without significant help.

Generation rent: why ownership feels out of reach


The UK housing crisis in 2025 is underpinned by Generation Rent – a term that refers to younger adults who are typically under 40 and find themselves renting for the long haul because home ownership is out of reach.

And it’s certainly not by choice. It’s circumstance. You’re working hard, paying more than ever in rent and still can’t get close to a deposit. It’s not just frustrating. It’s exhausting.

House prices have soared way beyond wage growth. At the same time, house deposit savings in the UK grow at a snail’s pace. Around 1% of your income, if that. It’s the kind of impossible maths that’s keeping an entire generation stuck.

The impact goes deeper than money. People are delaying starting families, moving back in with parents or living in shared homes well into their 30s. Financial security feels out of reach and the dream of owning a home keeps drifting further away.

But the problem isn’t you. It’s the system. That’s why finding every possible edge, like unclaimed tax refunds, matters. Even a few thousand pounds could shift the balance and help get you moving forward.

High housing costs vs income

Housing costs can eat up income fast. For 19- to 29-year-olds, 34% of income goes on rent. Among low earners, that jumps to over 70%. The old rule of thumb says no more than 30% of your income should go on housing. In 2025, that rule’s broken beyond repair.

When most of your income covers just staying afloat, saving becomes nearly impossible. Even if you managed to put aside 5% of a £30,000 salary – about £125 a month – you’d only save £10,500 after seven years. That’s still way short of most deposit targets.

Some first-time buyers turn to high loan-to-value mortgages (90-95%) to reduce upfront costs. But these usually come with higher monthly repayments, stricter credit checks and less wiggle room if things go wrong.

For many, like a tradesperson earning £30k and paying £900 rent, saving more than a few hundred pounds a month isn’t realistic. That’s why every financial advantage counts. Especially a tax refund.

Wider consequences of the housing crisis

The longer this goes on, the more damage it does. With so many stuck renting, the number of young homeowners is falling and that’s a big deal for long-term wealth.

Without a home, you’re not building equity. You’re missing out on financial stability, future borrowing power and even a more secure retirement. It’s harder to save for emergencies, plan for the future or invest in your career when you’re living month to month.

The knock-on effects are everywhere, from longer commutes to missed job opportunities and widening inequality. What starts as a deposit struggle turns into a lifelong disadvantage.

This is why it’s important to find smart ways to push back. And that’s where RIFT can help.

Practical steps to boost your deposit savings

You can’t change house prices overnight. But you can take steps to build your deposit. You can start with money you might not even know you’re owed.

If you’ve ever paid too much tax, let’s say for travel, tools, uniforms or switching jobs, you could be due a refund. The average RIFT tax refund is over £3,000. That’s nearly 10% of a typical deposit, just by claiming back what’s already yours.

Start with our free tax refund calculator. Then check out our budget planner to help make the most of every pound.

Other smart moves include:

  • File your tax return early – Knowing your refund in advance gives you more time to plan.

  • Cut everyday costs – Subscriptions, utilities and travel all add up.

  • Explore government schemes – A Lifetime ISA offers a 25% bonus on savings (up to £1,000/year), while shared ownership can cut the deposit required.

Even small changes can add up fast, especially when they’re backed by a tax refund boost for deposit savings.

Policy and economic outlook

2025 was supposed to be the year housing got more affordable. But interest rates remain high, inflation is still squeezing households and wage growth isn’t keeping pace. That’s making it harder to borrow affordably and even tougher to save.

For renters, it’s a perfect storm. Rising rents, rising costs and limited help are all making things harder. But while the system is slow to change, you don’t have to wait around.

Getting smart about your money, whether it’s checking for a tax refund, using the right savings account or cutting everyday costs, can give you more control, even in a difficult year like this.

Top tips for saving a deposit in 2025

  • Set your goal – Work out what a 10% deposit looks like for your region, then break it into monthly targets.
  • Know the gap – Compare your savings to the average deposit. If you’ve got £16,000 and need £50,000+, you’ll need a clear plan.
  • Open a separate savings account – Automate transfers right after payday to avoid spending it.
  • File your tax return early – A refund of £3,000+ could give your savings a serious kickstart.
  • Use government schemes – A Lifetime ISA or shared ownership could reduce the deposit you need.
  • Cut costs smartly – Cancel unused subscriptions, review your bills and shop around.
  • Build a buffer – A small emergency fund can stop unexpected costs from wiping you out.
  • Use RIFT’s tools – We’ll help you to track progress and spot hidden cash as well as offer expert advice.

How RIFT can help

Let’s face it, the odds feel stacked against young people trying to buy a home in 2025. But that doesn’t mean it’s impossible.

There are ways to fight back. From making the most of government schemes to finding hidden money in your tax history, every step counts. You’re not stuck, you just need the right tools and support.

Don’t leave money on the table. If you’re saving for a deposit, check if you’re due a tax refund.

Use RIFT’s free tax refund calculator to see how much you could boost your savings today, or get in touch for more info.

Frequently asked questions

How much is the average first-time buyer deposit in 2025?

Around £61,000 across the UK. In London, it’s closer to £125,000. Government data shows a mean deposit of £55,000, with a median around £33,000.

Why are young people struggling to save a deposit?

High rents, slow wage growth and low savings rates are making it nearly impossible to build up a deposit while covering day-to-day costs.

What is Generation Rent?

A term for people, usually under 40, who are stuck renting long-term because they can’t afford to buy.

How much of my income should go on rent?

Ideally no more than 30%, but many young renters are spending over 50-70%.

Can a tax refund really help me save for a deposit?

The average RIFT refund is £3,000+, which can cover up to 10% of a starter deposit.

What government schemes can help?

Look into Lifetime ISAs, shared ownership and the Mortgage Guarantee Scheme if you’re searching for government deposit schemes in the UK.