Although recent figures show the number of first-time buyers (FTBs) has reached its highest level in a decade1, there’s still a lot to be done to help those who are struggling to purchase their first home. NAEA (National Association Of Estate Agents) Propertymark has outlined suggestions to help FTBs onto the housing ladder.

1: Introduce longer fixed-rate mortgages 

FTBs need access too mortgage products that give them affordable monthly repayments

Although more lenders have introduced 95% LTV mortgages, the fixed-rate periods are low, and interest rates are high. FTBs are having to save £33,0002 on average for a deposit for their first home, so anything that brings the overall cost down is needed. FTBs need access to mortgage products that give them affordable monthly repayments, and a longer fixed-rate, but don’t require a huge sum of money up front.

2: Offer help to the other end of the market 

There’s so much focus on FTBs that it’s easy to forget the struggles being faced by buyers and sellers alike further up the property ladder. Property which would be suitable for those looking to buy their first home is currently occupied by first-time sellers who can’t afford to move up the ladder, so they’re staying put. Offering incentives to those at all ends of the market will mean more suitable FTB properties will be freed up.


3: Build more affordable housing

The imbalance of supply and demand in the UK has caused house prices to spiral out of control, pushing homeownership out of reach for many. More affordable housing is the key to helping FTBs entering the market3, according to three in five (58 per cent) estate agents, and until the Government fulfils its house building promises, the situation will not improve.

4: Lower the costs of moving 

Although the Government’s stamp duty relief for FTBs has lowered the associated costs of buying a home, there are many other additional costs which put a financial strain on FTBs . NAEA Propertymark agents think introducing discounted surveyors costs (11 per cent) and a form of grant to subsidise solicitors’ fees (11 per cent) would make things easier for the group3. Or by giving FTBs the option to borrow additional funds from their mortgage lender to cover these costs could provide them with that extra helping hand.

5: Less stringent mortgage criteria

In order to help FTBs, lenders need to approach their criteria differently. Those who are self-employed, or work as contractors are currently ignored because they might not fit their lending criteria. They are also required to produce three years of accounts to prove they earned what they claimed, which makes the process stressful and feel impossible. Furthermore, for aspiring FTBs who are currently renting, proving you can successfully pay your rent is not sufficient to make you eligible for mortgage repayments. We hope in the future, lenders will be able to take more sources into account when reviewing mortgage applications.

Mark Hayward, Chief Executive, NAEA Propertymark comments: “The Government’s announcement to abolish stamp duty for FTBs has helped buyers feel like the process is more affordable. FTBs are struggling, particularly when it comes to saving for a deposit, and this needs to be addressed. Positively however, FTBs are being practical. Since the stamp duty reforms we have seen evidence that outside of London in particular, they are delaying their search until they have more money saved, in order to purchase a bigger property. This means they’ll be able to stay in the property for longer, making the most of the stamp duty saving and, helping their money go even further.”

Figures from UK Finance released 13 February 2018 https://www.ukfinance.org.uk/first-time-buyers-in-2017-reach-decade-high-but-market-cools-in-december/

Average FTB deposit is £32,899 – taken from Halifax First-Time Buyer Rewiew released 1 July 2017 https://static.halifax.co.uk/assets/pdf/mortgages/pdf/170701-Halifax-first-time-buyer-review_July2017.pdf

Figures taken from NAEA Propertymark’s December Housing Report; more information is available on request at: www.naea.co.uk