BSA calls on the government to make first-time homeownership more affordable

A new report from the Building Societies Association (BSA) has found that significant changes are required if prospective first-time buyers are to get onto the property ladder in the current housing market.

It also warns that policy solutions that help today’s first-time buyers mustn’t compromise the homeownership prospects of future generations.

In March 2024, 32% of people reported that they want to buy their own home but don’t think they will be able to.

The report states that the biggest challenge facing first-time buyers is affordability – both affording the cost of buying a home and the cost of owning a home.

The sizeable deposit generally required to get on the property ladder has been a barrier to homeownership for some time.

Building societies have a strong track record of providing innovative solutions to support those taking their first step onto the property ladder and are responsible for around one-third of first-time buyer mortgage completions.

However, while they have the capacity to lend more to first-time buyers, radical reform is needed to fix our broken housing market.

With more than two million fewer owner-occupier mortgages since the peak in 2002, the BSA is calling on government to commit to working with lenders, the wider housing market industry, and the public, with the sole aim of making homes more affordable, more available, and more appropriate to the needs of those living in them.

The BSA said that the UK urgently needs the government to commission an independent review to set out a long-term strategy that will increase the number of first-time buyers, both now and in the future, with a commitment that the findings will be published and implemented within 12 months. 

Alongside policy action, regulatory changes are needed particularly to support those on the fringes to buy their own home.

The pendulum, which since the financial crisis has swung towards a stricter regulatory environment rather than towards the social benefits of higher rates of homeownership, should be reviewed to increase the availability of 95% loan-to-value mortgages.

Other areas of regulation where more flexibility is required include the cap on high loan-to-income lending.

Commenting on the findings, Paul Broadhead, head of mortgage and housing policy at the BSA, said: “Becoming a first-time buyer is possibly the most expensive it has been over at least the last 70 years, but a properly functioning housing market is dependent on first-time buyers being able to afford their first home.

“While building societies are creating bespoke, targeted innovations within the current regulatory framework, new thinking and radical changes are needed. 

“There is no silver bullet to increasing first-time homebuyers and it won’t be possible to help everyone who wants to become a homeowner in the current high price-to-income housing market.

“But there are many things that can help to fix the broken housing market.

“That starts with changes to regulations and support schemes that not only help today’s first-time buyers, but don’t fail future generations.”

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