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Over a third of brokers call for better housing supply and affordability to help FTBs – poll results

  • 07/03/2024
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Over a third of brokers call for better housing supply and affordability to help FTBs – poll results
Approximately 38.7 per cent of brokers back increased housing supply though downsizing and housebuilding to support first-time buyers, a Mortgage Solutions poll has found.

According to a Mortgage Solutions poll, this was followed by 36.6 per cent who called for improved affordability models to help first-time buyers.

Only 19.4 per cent said that high-loan-to-value (LTV) mortgages would aid first-time buyers, and 5.4 per cent said that better savings products were needed.

First-time buyers have been a popular topic of discussion in recent weeks, with rumours suggesting that the government would introduce a 99 per cent scheme to assist this segment. However, this idea was dropped last week.

Chancellor Jeremy Hunt did not mention first-time buyers at all in his speech yesterday, with minimal measures to support this segment of the market.

The Building Societies Association (BSA) called for a review of the high-income multiple cap and to make mortgages more flexible to improve the prospects of first-time buyers, with UK Finance noting that Lifetime ISA (LISA) reform alongside Help to Buy revival, expansion of First Homes and housing supply issues needed to be addressed.

Paul Broadhead, head of mortgages and housing at the BSA, said: “It’s no surprise to see that the top two options selected were improved affordability models and increased housing supply. The biggest challenge facing first-time buyers is affordability – both affording the cost of buying a home and the costs of owning a home.

“A properly functioning housing market is dependent on first-time buyers being able to afford their first home. Whilst building societies are creating bespoke, targeted innovations within the current regulatory framework, new thinking and radical changes are needed. We are keen to see changes to regulation to better support first-time buyers, including allowing mortgages to be more flexible.

“The BSA has long called for an increased focus on housing supply, a long-term strategy to make homes more affordable, more available and more appropriate for those living in them is vital.”


First-time buyer scheme reform urgently needed

Paula Higgins, chief executive of the Homeowners Alliance, said that it was “no surprise there is overwhelming support” for better affordability models and more house building to help first-time buyers.

She said that its research found that 28 per cent of younger homeowners relied on government schemes to buy a home. This includes LISA, shared ownership and the now defunct Help to Buy.

Higgins added: “More can be done to optimise these current schemes. For instance, urgent changes are needed to the LISA to make it future-proof and fit for purpose for all aspiring owners.

“This includes increasing the thresholds so there are more available properties, removing unfair penalties and allowing people to save more. Shared ownership is often overlooked, yet our survey found that seven per cent of younger homeowners used shared ownership, with many saying that they would never be able to own without it.”

She said that the “biggest issue” was that it hasn’t built enough houses for decades and a lack of suitable housing was a “major barrier for those thinking of downsizing”.

“Building more of the right types of homes will encourage downsizers to move from homes that are too big and permanently abolishing stamp duty for anyone buying a home to live in will also help to encourage people to move,” Higgins continued.

Craig Hall​​​​, director of New Homes Financial Services, agreed that “affordability remains the number one challenge”, but mortgage pricing had improved, and lenders were offering more flexibility with longer-term fixed rates.

“The affordability challenge facing buyers and the broader challenges such as planning, rising costs and legislation, confronting housebuilders have negatively impacted new homes supply.

“Most major housebuilders have reported a reduction in the number of completions over the last 12 months. The sector requires a period of economic stability and long-term government policy intervention if the sector is to get anywhere near supplying the 300,000 homes per annum expected of it,” he added.


Innovation needed across the board to help first-time buyers

Nicholas Mendes, mortgage technical manager at John Charcol, said that the poll results highlighted the “well-known barriers” prospective buyers face.

He continued: “Lack of stock continues to hold up property prices against adverse headwinds such as high mortgage rates, but as the UK population continues to grow, the lack of stock being built will continue to exacerbate. Pushing up property prices and deepening affordability concerns.

“Despite the innovative approaches we’ve seen in recent years to overcome affordability and deposit barriers from Skipton’s track record, variations of family assist mortgages such as springboard, joint borrower sole proprietor (JBSP), shared ownership and the recently launched Own New to name a few. These all assist but don’t fully overcome the main issue.”

Mendes said that first-time buyers were an “important cog in the wheel” of the market, and without them there was “no housing market”.

“Not only do existing homeowners find themselves unable to move up the ladder, but the price of houses also must come down as there is less liquidity in the market.”

He said that the government needs to work with all stakeholders and “actively work to streamline the process for developers and remove bureaucracy”.

Developers also need to build homes for “all generations”, and further incentives for downsizers to move through stamp duty reform would also be helpful.

Another possible solution was allowing first-time buyers to dip into their pension pots to raise a deposit, but caveats would be needed to ensure there was enough time to replenish the money.

Mendes added that government support and encouraging more lenders to join the Help to Build scheme and improvements to make the scheme more generous would assist more buyers onto the housing lender.

He continued on to say that Build to Rent schemes for lenders and developers could mean “long-term added security and stability for those looking for longer-term tenancies” and help first-time buyers save for a deposit.

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