As lenders, our purpose is to put homeownership within reach of more people, generation after generation. But as a result of affordability constraints coupled with limited housing supply, the odds are stacked up against would-be homeowners.
In October, the Chancellor Rachel Reeves announced a number of measures to address some of these challenges.
The government confirmed £5bn investment in development and construction, and an increase in funding for the affordable homes programme.
Building more homes, including affordable ones, is a crucial part of solving the national housing crisis, and the Government’s ambition to build 1.5 million homes in the next five years could have a hugely positive impact on the mortgage industry.
However, the decision from the new Chancellor not to maintain the stamp duty relief for first time buyers paying up to £425,000 for their home is likely to cause a surge of activity among those effected, before dropping off a cliff edge.
We expect about one in five first-time buyer transactions to be impacted by the 1 April change and it’s likely to have a big impact on activity in the new year.
According to our calculations, after April, buyers will have to pay stamp duty on 93% of properties on the market in England under new rules.
There are regional variations in this data; for example, in Yorkshire, buyers will pay stamp duty on 49% of houses currently on the market. However, once the anticipated changes come into force, this will increase to 86%.
On top of this, the changes will mean the average first-time buyer renting privately in London will need to save for up to an additional 12 months to afford their own property, on top of the 25.8 years it would likely take them to save the initial average deposit in London whilst privately renting.
The housing market has changed dramatically in recent decades, with house prices paid by first-time buyer’s being 16 times higher in 2022 than in 1982, whilst gross earnings were just seven times higher.
We believes things need to change if home ownership is to become a realistic aspiration for more than a shrinking number of young adults with both above-average incomes and financial support from their parents.
Decades of under delivery on housebuilding by consecutive governments has led to a position where an imbalance in supply and demand has driven up the cost of homes and put significant pressure on each and every tenure.
We all know the value that having a place to call home can add to our lives. As a mutual, we were set up to help people own their own home and save for their future, creating a sense of belonging in communities across the country.
I was very pleased to see the Government’s commitment to social and affordable housing and renewed interest in house building, but our country needs to develop a long-term and joined-up plan to improve stability in the housing market if we are to solve the problem.
This needs to be a plan focused on delivering more homes, supporting first-time buyers to save for their deposit and extending affordable routes into home ownership.
Martese Carton is director mortgage distribution at Leeds Building Society
