Falling approvals for first-time buyers have seen the Scottish government allocate an extra £4.65m of funding to its Open Market Shared Equity scheme to help those on low to moderate incomes get on the housing ladder – doubling its commitment to £9.4m.
Meanwhile, the Ernst & Young ITEM Club has proposed the abolition of Stamp Duty for first-time buyers in an attempt to kick-start UK growth.
It is right that this sector of the market gets some attention – attention that has resulted in action in Scotland, but that resonates across the UK.
A survey at Westminster earlier in the year emphasised how dear this cause is to MPs’ hearts (and ballot boxes).
With deposits now tens of thousands of pounds and the bank of mum and dad running out of funds, four in five MPs wanted more support for their constituents, rising to all of those with London constituencies.
However, this single issue approach is fire fighting and, at worse, suggests that sorting this issue will somehow galvanise volumes of activity.
It will help, but only to a limited extent, while many second-time buyers, who purchased their first home in the property boom and when high loan-to-value mortgages were readily available, remain unable to move.
These borrowers, with relatively small mortgage deposits at the outset, have seen falling property prices wipe out the equity they may have had. This has made the task of selling for a profit or remortgaging impossible in the short to medium term.
They are getting help in the form of long-term low interest rates, but this means no remortgaging and no moving.
Lenders can often help their existing borrowers by allowing them to “port” their negative equity, but the mass market area of the property market is somewhat paralysed.
Even where they can sell, many prefer to play the waiting game and hold on until a buyer with the requisite cash turns up.
In our work as an estate agent and valuation and surveying business, we deal with all types of borrowers, who are as unique as the properties they own.
Focusing on one segment to the detriment of another is likely to correct one imbalance at the cost of creating another.
Each part of the value chain has its own industry representation, whether CML, AMI or in our case RICS, but I can’t help feeling this silo approach to this significant issue is not helping.
The industry needs a more coordinated response to inform and influence policy makers. That way we can ensure we build something that is achievable and starts to really address the bigger picture.
Alison Beech is business relationship director at Spicerhaart
