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First-time buyer affordability: how brokers can help – Stinton

by: Jonathan Stinton, head of intermediary relationships at Coventry Building Society
  • 29/07/2022
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With the cost of living rising and house prices soaring, the affordability challenge facing first time buyers (FTBs) is arguably bigger than ever before.

Those who wish to purchase their first home not only need to save an ever-increasing deposit towards the property itself, but they must also consider many additional costs from solicitors fees to stamp duty.  

 

The FTB economy  

According to a recent report by Coventry for intermediaries and the Centre for Economics and Business Research (Cebr), the first-time buyer economy is set to reach £73.1bn by 2024. As part of this growing part of the UK economy, buyers are set to spend more than £10,000 each on the extra expenses associated with buying a first home, such as renovations, furniture, legal and moving costs, surveying fees and more. These are stark figures, and the same research showed that some of this group either completely underestimated these costs or were unaware of them altogether.  

On top of that, with the full stamp duty holiday now over, and house prices rising above the £300,000 threshold for FTBs, more people hoping to step onto the ladder are facing these additional tax costs. In fact, one in four FTBs are now paying stamp duty, up from one in six in 2020.  

Aside from policy reform at government level to remove or reduce this tax burden, it’s tricky to bring these costs down. Yet, there is a role brokers can play to help inform and educate FTBs to ensure they are prepared for the real costs of homeownership.  

 

The role of the broker 

In a practical sense, and perhaps the most obvious way in which they can help, brokers can provide access to a much broader range of mortgage products to help find borrowers the best possible rate and the most suitable product, especially when we’re seeing so many external and uncontrollable factors impact the market.  

In a similar way, brokers can also signpost green products that can help borrowers save on renovation costs when they buy. Many lenders have green incentives to encourage borrowers to improve the EPC rating of their property, such as offering to pay towards energy efficiency improvements that borrowers carry out. 

When it comes to unavoidable additional costs, the role of the broker is to help their clients anticipate these fees and refine their budgets to factor them in. Given the high importance FTBs ascribe to their brokers’ advice – 74 per cent considered it valuable in their experience according to our research – brokers have an opportunity and responsibility to advise FTBs on how to save for and mitigate these additional costs. This will put buyers in a better position to cope financially prior to purchasing their first home.   

By offering this guidance, brokers will not only help new buyers onto the housing ladder and improve their own business pipeline, but they will also be helping to ensure that FTBs continue to play their important role contributing to the UK economy.  

By supporting FTBs before, during and after buying a home, brokers really demonstrate their value to new borrowers. Educating new buyers on the need to budget for additional costs and going above and beyond to deliver a quality service can create life-long relationships and will, in turn, provide brokers with repeat business for the years to come.   

It’s a win-win for everyone. 

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