Supporting first-time buyers requires new thinking and radical changes

Reforms are needed to ensure homes are more affordable, more available and more appropriate for those living in them.

A new report from the Building Societies Association (BSA) will say that significant changes are required if we are to help prospective first-time buyers get on to the property ladder in the current housing market, without compromising the prospects of future generations of homebuyers.

The report, which has been authored by housing expert Neal Hudson and will be published in April, looks at the compromise between financial stability and growing the number of first-time buyers. The report findings will suggest that since the financial crisis this has tilted too far in favour of financial stability. The inevitable cost of this imbalance has been the exclusion of many would-be homebuyers from the housing market. We now need a long-term strategy to make homes more affordable, more available and more appropriate for those living in them. Some of the changes needed include:

  • Reviewing the relative costs and benefits of a stricter regulatory environment versus those of higher homeownership rates to strike the right balance between financial stability and enabling access to home ownership. 
  • Changing regulation to allow mortgages to be more flexible. This could include allowing more part-repayment, part-interest only lending – with the flexibility to shift between them over the life of the loan.
  • Reviewing the 15% cap on lending at 4.5 times income, including whether it should specifically support first-time buyers.

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. However, the BSA Property Tracker Report shows that the recent interest rate rises have led to affordability of mortgage repayments being cited as the biggest challenge for would-be first-time buyers.

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, more radical reform is needed to fix our broken housing market.

Paul Broadhead, Head of Mortgage & Housing Policy at the BSA said:

“A properly functioning housing market is dependent on first-time buyers being able to afford their first home. Whilst building societies are creating bespoke, targeted innovations within the current regulatory framework, new thinking and radical changes are needed. 

“Many things can be done to fix the broken housing market. But we need to ensure that changes to regulations and support schemes not only help today’s first-time buyers, but don’t fail future generations.”


Press contacts:
Tanya Jackson, tanya.jackson@bsa.org.uk Tel: 07881 501098
Katie Wise, katie.wise@bsa.org.uk Tel: 020 7520 5904

Notes to Editors:

  1. The Building Societies Association (BSA) represents all 42 building societies, as well as 7 of the larger credit unions. Building societies serve around 26 million consumers across the UK and have total assets of over £507 billion. Together with their subsidiaries, they have helped over 3.5 million families and individuals to buy a home with mortgages totalling over £375 billion, representing 23% of total mortgage balances outstanding in the UK. They are also helping over 23 million people build their financial resilience, holding over £370 billion of retail savings, accounting for 19% of all cash savings in the UK.  Within this, societies account for 40% of all cash ISA balances.
  2. With all of their headquarters outside London, building societies employ around 51,500 full and part-time staff.  In addition to digital services they operate through approximately 1,300 branches, holding a 28% share of branches across the UK. 
  3. This report has been prepared with the support of Coventry Building Society, Nationwide Building Society, Leeds Building Society, Skipton Building Society and Yorkshire Building Society. A summary version is available here