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Solving the first-time buyer paradox – IMLA

by: Peter Williams, executive director, IMLA
  • 25/07/2016
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Solving the first-time buyer paradox – IMLA
Housing has always been a top-tier political issue, but in recent years questions about owner-occupancy and affordability have come to the very fore of British political discourse.

The public, and particularly the younger generation, now have significant concern about whether would-be first-time buyers have enough opportunity to get a foot on the ladder, which gives policymakers the opportunity to score cheap political points with bold promises and policies.

Recently, the private rental sector and the landlords who maintain it have unfairly shouldered a lot of the blame for first-time buyers’ woes, despite the fact that a healthy rental sector is of paramount importance to the UK. First-time buyers have actually been largely let down by successive governments’ housebuilding policy failures.

Innovative programmes like Help to Buy and the Starter Homes scheme have made a difference to some buyers, but they have failed to have the wide-reaching impact policymakers would have liked. Despite the huge amounts of money that the government has thrown at first-time buyers through various schemes, the latest English Housing Survey shows the age of average first-time buyers is increasing and that owner occupancy rates remain flat.

IMLA’s Mortgage Market Tracker also provides an indication of pent-up demand with only 51% of enquiries to brokers from first-time buyers progressing any further in Q1 2016, compared to 55% across all would-be mortgage borrowers – a sign, perhaps, of some aspiring owners making tentative enquiries and finding their way blocked by affordability constraints.

The provision of mortgage finance is integral to ensuring the housing market can cater for a wide range of first-time buyers, not just those reliant on the ‘Bank of Mum and Dad’. Even after the vote to leave the EU, this will likely remain a key priority for the government in the new political environment. To meet the needs of prospective homeowners whose affordability is stretched by rising prices, policymakers must also support innovative and high loan-to-value (LTV) lending.

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