A new government with ambition for boosting homeownership sounds promising, but with the UK facing a housing crisis, will they be able to solve the issues? asks Lucy Lewis, senior national accounts lead at Skipton Building Society.

A recent report from Skipton Building Society revealed just an eighth of potential first-time buyers would be able to afford a home in their local area, and what made these findings particularly surprising was that even high earners with incomes in excess of £71,000 were feeling the affordability strain.

While Labour’s intention to build 1.5 million homes may not address all barriers, could the right market proposition bring homeownership back within reaching distance?

Getting onto the property ladder goes beyond buying a home, people need to be assured they can afford to continue living in and maintaining it.

Making this achievable requires a willingness from lenders coupled with an adaptable, novel approach to lending.

Making homeownership feel possible

The solution to getting more people to own their homes is multi-pronged and the costs attached do not make it any easier.

A big hurdle for many is raising a deposit.

Research from the Building Societies Association (BSA) suggested the average deposit needed by a first-time buyer for a home in the UK was £60,000 – a substantial ask when the median income is £34,963.

This was reflected in data from the Office for National Statistics (ONS) which showed housing in England and Wales had been unaffordable for the last 22 years, as house price growth outpaced average earnings.

This means some people will need assistance to accumulate the money needed, and they may be able to consider their lender as a source of help.

Skipton has looked to help address this with its recently launched Home Deposit Saver account, which has a generous variable interest rate of 5.06% and can bump up the required £500-a-month savings of each customer.

However, even with a sizeable deposit, an 8.3 house price to income ratio means some people may still fall short of lenders’ affordability criteria.

To work around this, some aspiring homeowners are turning to their community and relying on the Bank of Mum and Dad or purchasing with a friend to supplement their deposit or income.

People are considering newer, alternative means to become a homeowner..

Not everyone will get onto the property ladder in the same way, and Skipton’s Income Booster scheme (aka JBSP) is a great option for potential buyers to consider.

It allows three additional people to support a mortgage without them being legal owners of the property, regardless of their relationship to the buyer.

The mutual will use all incomes for the affordability assessment which can increase the loan the homeowner is able to achieve.

Easing anxieties

Unfortunately, affordability worries do not necessarily end once an owner has the keys to their home, and the just-gone surge in interest rates and cost of living crisis has put this at the front of mind.

These concerns were reflected in a survey from the BSA which showed 68% of prospective homeowners were most worried about affording monthly mortgage payments.

Extending a mortgage term is something many first-time buyers and current homeowners have chosen to do in an attempt to stretch their payments and make them affordable.

This is only possible with a lender that allows this flexibility, however, and Skipton has demonstrated its ability to adapt by lending on terms of up to 40 years for a capital and interest mortgage.

Locked out the market

While the aforementioned solutions help those who are further along the journey of homeownership, there are others who still feel perpetually locked out of the market.

This might include renters, who have seen costs spiral due to a lack of available properties. The government’s plans to deliver more homes through planning reform could help to ease this but, in the meantime, renters who want to become homeowners may feel constrained by their current expenses.

This may seem unfair because, in many instances, the cost of renting is more than the cost of paying a mortgage, yet renters are left with less spare cash to raise a deposit or prove they have the financial flexibility to pass most lenders’ stress tests.

Skipton’s innovative Track Record mortgage was developed precisely for this reason, and the mutual will consider a borrower’s historical rental payments to allow them to borrow up to 100% loan to value.

The product is open to first-time buyers and people who haven’t owned a home for three or more years.

The right attitude

Although it is all well and good to develop products which could help people onto the property ladder, not all circumstances are the same and lending policy must consider that.

Skipton works hard to balance the use of technology with the importance of considering each individual case on its merits. Where possible, automated valuation models (AVMs) and auto income verification are used to reduce the time taken to offer each case with the average application to offer being 9.1 days*.

This also includes Skipton’s intermediary support team, which is bolstered by its webchat service.

One broker who dealt with Skipton’s webchat service said it was a “breath of fresh air”, describing it as “very efficient” and “quick”. The broker also praised the ability to receive “accurate responses straight from a human”.

For more complicated cases, there is an amazing team of underwriters who are able to look at circumstances surrounding each individual case.

There is no doubt some people in this country may feel a sense of post-election optimism regarding the fresh attention given to housing, and as part of the lending community, Skipton must do all it can to support this hopefulness with real solutions.

*based on working days in H1 2024