Ways to help first time buyers enter the housing market

publication date: Mar 27, 2018
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author/source: Kate Faulkner, Property Expert and Author of Which? Property Books

How can first-time buyers enter the market?

What should people in their 20s be doing to establish whether they can afford a home now – or in the future?
A recent survey from house builder Bellway revealed that 87% of Brits wouldn't give up avocado on toast to purchase their first property. Which is odd, because as Andy who works with me pointed out, it isn’t actually that tasty anyway!

While this is a nice headline for the media, with fantastic initiatives like Help to Buy and more robust planning laws to push through more permissions, there has never been a better time for first-time buyers to look at the sacrifices they can make – which people have always had to do to get on the ladder. For example, a Help to Buy ISA will top up a deposit by 25% up to £3,000 and even more if it’s a Lifetime ISA. Using this coupled with shared ownership can mean you can buy a home in what would otherwise feel is an unaffordable area.

Spring statement pledges to help first-time buyers in London and the West Midlands
And more help is on the way. One of the increasingly important documents for buyers, especially those buying for the first time, is the “Local Plan”. And following the recent government announcements on planning – one of which was a new delivery test for local authorities to be monitored against these plans – they are likely to have more of an impact on property provision at a local level.

The Local Plan outlines the authority’s planning policies and identifies which areas of land can and will be built on. This is then shared with local people and, in theory, their views are taken into account.

For potential buyers, the Local Plan is vital as it can help work out what may be coming onto the market so that buyers know what to save for in the next few years as the plans detail how many and what type of properties will come onto the market.

It is also something you can contribute to. After reading the plans, you may think that the local authority has missed the needs of your area and you have every right to let them know.

The recent Spring Statement highlighted the plans in London and the West Midlands and below are the key points:

London plan highlights from the Spring Statement:

  • £1.67 billion funding package deal to build 26,000 more affordable homes;

  • The deal will see a minimum of 116,000 more affordable homes in London than current levels;

  • Total funding for affordable housing in London will rise to £4.8 billion;

  • The extra funding will deliver homes for social rent, London Affordable Rent, flexible shared ownership and rent to buy;

  • No less than two-thirds of the homes built with this funding will be for rent.

West Midlands housing package:

  • The West Midlands will receive a £100 million funding package to help the Mayor's plan of delivering 215,000 homes by 2030 to 2031;

  • The funding will help acquire land to prepare for housing and increase density;

  • This tallies with the Mayor of West Midland's promise to deliver around 16,000 homes per year;

  • The Mayor wants all local authorities in the West Midlands to have local plans in place by 2019.

Shared ownership opportunities
As has been said above, shared ownership allows buyers to get on the ladder when they otherwise might not be able to. They will purchase a share in a property, usually with a developer or housing association, and pay rent on the portion they don't own.

Here are few opportunities the team spotted in traditionally prime markets:

Duke of Wellington Avenue

Where: London, SE18, Woolwich.

Property type: Two bedroom apartment.

How much: £91,250 for a 25% share.

Available now.

 

Chieftain Way

Where: Cambridge.

Property type: Four bedroom terrace.

How much: £105,000 for a 25% share.

Available now.

 

Anstey Road

Where: Farnham, Surrey.

Property type: Two bedroom flat.

How much: £70,000 for a 25% share.

Available now.

Pocket Living
And there is even more good news with companies dedicated to building private homes, but more affordable ones. For example, Pocket Living design one bedroom 'pocket' homes for Londoners earning under £90k per year (or two salaries of under £45k) They are specifically for first-time buyers living or working in the borough in which the relevant development is located. Pocket Homes are marketed at least 20% below surrounding market rate. The idea is for young people in London to be able to live in the area they work and socialise.

You can see a selection of Pocket Living developments here.

Up until now, it’s been tough for first time buyers to get on the ladder, but in all my time in property, I’ve never seen such an effort to support people to get their own home – be it for rent or purchasing.

As such, this is a really good time, especially with mortgage rates still being at a historic low to consider what you can sacrifice now to get on the ladder and secure a home for your future.

First-time buyer quick guide - Property Checklists

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Which? Property books and one of the UK's top property experts.
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