How to overcome the challenges of helping first-time buyers onto the housing ladder is a recurrent theme, put back at the top of the political agenda by the election. It became one of the key campaigning points for all main parties. 

Labour announced its intention to launch what it called a ‘Freedom to Buy’ scheme. ‘Freedom to Buy’ appears to be a revived version of the Conservative’s Help-to-Buy mortgage guarantee scheme where the government and taxpayer underwrites part of the risk, for lenders offering 95% loan to value (LTV) mortgages. 

The challenge for lenders, united in their desire to help overcome the challenges for first-time-buyers, is a long standing one. It was discussed at the well-attended Building Societies Conference in Manchester in May. 

On a panel that included representatives from Leeds and Skipton building societies, the Smart Money People website as well as the managing director of Target, the thorny issues were discussed. This included affordable housing, land grabbing by developers, a lack of housing stock and high rents making it increasingly difficult for renters to save for a deposit.

The overwhelming problem of too few homes has been illustrated in recent research by the Department for Levelling Up and the Office for National Statistics, recently published by Bloomberg.

Governments for many years have promised to increase the supply of housing, and both main parties stuck with the pledge made in 2019 to build 300,000 houses per year. But no party has yet delivered this target, with only 231,100 new homes built in 2023, according to EPC data. This is 9% lower than 2022 and marks the fifth consecutive quarterly fall in annualised completions according to Savills.  

The new Labour government says it will ease planning rules as well as rules around what classifies as green belt, or what the government wants to call ‘grey belt’. This it describes as “poor quality and ugly areas” of green belt, such as disused car parks and wasteland. It wants this land to be used for new homes, citing that half of these should be affordable housing. We wait with anticipation to see if these planning reforms will mean that building the much-needed 300,000 will now become possible. 

It is not only too few homes that is the issue, but that one size has to fit all, which the panel felt doesn’t work. Instead, there is a growing requirement for different models of homeownership.

There is often much mocking that if only first-time-buyers were prepared to make the requisite sacrifices, such as giving up coffee and avocados, they would find a deposit much more quickly. Not only did the panel feel this was derogatory, but a little bit of research soon shows a first-time-buyer would have to forgo their daily cup of coffee-shop coffee for 17 years to save the typical deposit of £22,000.

There are structural problems that increase the challenges and, for some, the commitment of saving for a deposit, together with high rents and increasing interest on student loans, not to mention escalating house prices, just seems just too overwhelming to tackle. 

While many talk about an intergenerational battle, it is actually more of a battle between the haves and the have-nots, often diminishing the intergenerational argument. In many cases it is those with family who can help with a deposit and the cost of living, who often get a leg up onto the housing ladder, and those without the benefits of the Bank of Mum and Dad who find it impossible to buy.

The discussion was then ‘how can building societies and other lenders communicate in the channels of the people who may not get family help and may also feel too embarrassed to admit that they feel overwhelmed?’ There was a consensus on the need for proper advice to be more accessible so potential first-time-buyers do not feel their only source of advice is TikTok and other social media.

There was a passion amongst the building society representatives to innovate and be a driving force to help people to save for a home. 

For example, it was felt about 12% of first-time buyers do not have a good enough credit score. This could be through defaults but was often people who had been prudent and saved carefully but then didn’t have a visible credit score as a result.  Tom Wrigglesworth, from Leeds Building Society, revealed Leeds is working with Experian to help people take responsible spending and saving decisions to build up the credit score which would enable them to get a mortgage.

Other suggestions ranged from the requirement for 100% LTV mortgages to make a comeback. Another was the need for more savings vehicles, such as a lifetime cash ISA especially designed to help build up a deposit - but one where the limit on the amount someone can save, rises in line with rising house prices. 

As the number of single home buyers has dropped dramatically, there is also a growing need for shared ownership or other such initiatives, perhaps with stepping stones to help people access affordable homes. 

A more radical idea was to incentivise older people to move into smaller homes: perhaps reducing stamp duty for downsizers. This would free up larger homes for growing families with a cascade effect of making more housing available down the chain. 

One of the biggest things that we need from the new government is stability – particularly in housing ministers. This has been such a revolving door with 16 different housing ministers since 2010, there is a desperate need for someone to stay in post for the length of a parliament, so they have enough time to really make a difference. 

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