Call For More Support For First Time Buyers

March 15, 2023

Leading figures in the UK housing sector have criticised the lack of support for first time buyers in the recent Spring Budget. In particular, commentators pointed out the failure to introduce new buying schemes, and called for permanent reforms to stamp duty to help people move more easily into age-appropriate housing, the Financial Reporter writes.

However some commentators welcomed the announcement of more state childcare support for working parents with children aged nine months to three years. This is because lenders take into account childcare costs in their mortgage affordability criteria, and these are often the highest monthly household expenditure after rent or mortgage repayments.

Therefore, more free childcare will open up the possibility of getting on the mortgage ladder for thousands of families with young children who currently cannot afford to. It is often the case that they are paying higher monthly rent than they would in mortgage payments, but still fail to meet strict lending criteria due to high nursery fees.

Leeds Building Society CEO, Richard Fearon commented: “We welcome this Budget as an effort to return sound economics to the heart of government and provide a plan for growth. It is however a missed opportunity to grow the economy by addressing the UK’s home ownership crisis caused by a lack of housing and show support for savers.”

He added: “While it is particularly positive to see support for families with young children struggling with the cost of childcare, we know that owning your own home also brings huge economic, education and health benefits.”

“With the affordability of home ownership now at its worst point for 150 years it is clear that support for first time buyers must be a key battleground at the next General Election.”

Other commentators welcomed the measures to get more people back into work and tackle the rising cost of living, as this will improve the homeowning prospects for thousands of potential first time buyers and boost the confidence of the housing market. For example, the Energy Price Guarantee has now been extended to June.

The absence of any new measures to encourage more buy-to-let landlords back into the market was also criticised. Changes to the way landlords have to report Capital Gains Tax have made buy-to-let properties less attractive in recent years, causing many to sell up and exit the market altogether.

Despite the lack of any tangible direct support for the housing market, the general consensus around the Spring Budget was that it will inspire a sense of continuity and stability in the financial markets.

This is in contrast to the radical changes that were announced in the autumn mini-budget that caused panic in the markets and spiked mortgage rates.

If inflation continues to fall as predicted and the UK avoids a long recession, then it is likely that the housing market will remain resilient despite any more robust support measures.

If you would like to talk to IVA mortgage specialists, please get in touch today.

Your home may be repossessed if you do not keep up with your mortgage repayments.

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