The housing minister Grant Shapps summoned various parties to “frank and open” discussion on the difficulties currently facing first-time buyers. The Government estimates that 1.4 million households want to own their own home but currently can’t obtain a home loan. Present at the meeting was the Council of Mortgage Lenders (CML), the Building Societies Association (which represents lenders) and various watchdogs and regulators. Mr Shapps used the meeting to discuss options such as creating new products specifically aimed at first-time buyers as well as shared ownership and specialist insurance for lenders.
The CML estimates that a first-time buyer must now typically save more than a year’s salary to be able to afford the deposit for a home. At the start of 2007 the typical deposit stood at £12,700 but today it is £31,500. Not greatly surprising then, that the average age of a first time buyer, who has no financial support from family, is 37.
Mr Shapps said that he wanted members of the industry to start talking to each other but not to return to reckless lending levels: “I do not want to see the current generation completely locked out of the market. The pendulum has swung too far the other way, where even if you have a good salary and save to get a deposit, you still cannot get a deposit.”
The minister’s figures were disputed by the CML who said that the average age of a first-time buyer, without family help, stood at 31, not 37. It said that a range of initiatives such as shared ownership, product innovation and insurance policies could play a part in gradually recovering the number of first-time buyers. The Building Societies Association said that lenders’ hands were forced by funding problems and stricter regulations – namely having to hold more capital for ‘riskier’ borrowers. It also said that any new schemes must be run in parallel with a faster home-building programme.
Research from property website Rightmove suggested that 23% of people who planned to buy a property in the coming year would be first time buyers. The general rule of thumb within the industry is that twice this percentage of first-time buyers is considered a healthy housing market. First-time buyers are regarded as crucial to any housing revival, but many have only been able to get on the property ladder with help from relatives; this accounts for 84% of those aged under 30, according to the CML.