First-time help

Rob Clifford

August 3, 2016

family

Rob Clifford is group commercial director at the SDL Group which is a shareholder at CENTURY 21 UK, MoneyQuest and Stonebridge Group

As Theresa May stood outside Number 10 as this country’s new Prime Minister, she gave a speech which focused intently on those individuals within the UK who, for whatever reason, may feel hard done by.

This, she said, would be a ‘new’ Government for those people who perhaps feel their life chances had been taken away from them. Undoubtedly amongst this group were those who, so far, had not been able to get a foot on the housing ladder.

Since that time, and perhaps until the Autumn statement later this year, there will be a large amount of speculation about what this actually means in terms of Government policy, and what (further) support may be provided to potential first-time buyers. Let’s not forget that over the last six years considerable State resources have been put into helping first-timers get to where they want to be, much of it through the various iterations of the Help to Buy Scheme.

What comes next is anyone’s guess – there are already calls for a further overhaul to stamp duty and potentially an extension to HTB2 (the mortgage guarantee element). Whether there should be further support for first-time buyers, however, is another question. Some might argue that securing a first home has always been difficult and that the State should not be going overboard in terms of subsidising purchases, however given the road already travelled by this Government, one suspects it will not be averse to pushing the boat out further.

What has been interesting since the political upheaval caused by the Brexit vote, is that lenders already appear to be cottoning on to the fact that Theresa May’s Government may be even more pro-first-time buyer. Just this week, NatWest made a number of changes to its first-time buyer range, in particular, reducing rates on its 95% LTV HTB2 product.

Now, given the recent direction of travel with HTB2 has been less activity bordering almost on a slight inertia from Scheme members as we move towards what should be the end of the scheme this year, this is an intriguing move. As noted above, there have been calls for an extension to HTB2 and NatWest’s move might suggest that this is more on the cards than previously imagined. Indeed, should we see further price movements, perhaps even the launch of new products from HTB2 lenders, then this would firm up the assumption that HTB2 may run into 2017.

But what of first-time buyer market activity? Does it actually need boosting? Recent figures from Halifax suggest there was a 10% increase in numbers during the first half of 2016 when compared to the same time period last year. But, when you compare this to a decade ago, we are still some way off – indeed there were 36,700 more first-time buyers in the first half of 2006 compared to this half-year with its total of 154,200. That said, we are definitely seeing an upward trajectory and any further Government support, and a lender reaction to this, would probably move it further upwards.

Of course, tied up with any assessment of first-time buyer activity has to be the whole notion of housing supply. A recent report from the House of Lords suggested the Government and house builders should be looking at building 300,000 new units every year, rather than closer to the 150,000 they are currently achieving. The widely-quoted figure, when it comes to new homes, is often 250,000 new units each year in order just to stand still, and we are clearly nowhere near that. But I’m not sure simply upping the target actually gets us to where we want to be – instead there has to be (if you’ll pardon the pun) something a bit more concrete behind such calls.

Overall, the rest of 2016 could well be a good year for first-time buyers. Certainly lenders will want the next five months to deliver in terms of business activity, and further forays into higher LTV lending will play to the first-time buyer market. Also, the housing market ‘field’ may be more open to first-timers than it has been for some time – buy-to-let landlords may feel less inclined to add to portfolios over the next 12 months while the changes impacting their market bed in, and so might not provide as much competition for housing as they have done in the recent past. Were the Government to become even more first-time buyer friendly then the ball could certainly be back in first-timers’ court for some time to come.

 

 

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