At a time when an increasing number of people are struggling to get onto the housing ladder and home ownership is sounding like a distant dream, first time buyers (FTBs) are being given a helping hand by the government. Despite talk of a housing bubble, various schemes are aiming to help FTBs who are unlikely to be able to save a big enough deposit to own their first home.
The number of loans taken out by, and value of loans sold to FTBs, (shown in Chart 1 and Chart 2 respectively) are, however, on the up. Estate agent Haart claims that registration for FTBs was up 82.1 per cent in December 2013 on 2012 figures thanks to a huge increase in demand from Help to Buy schemes. This is backed by figures from the Council of Mortgage Lenders (CML), which showed FTB lending in the third quarter of 2013 was up 32 per cent year-on-year in London - traditionally a hotspot for FTBs being excluded from home ownership due to expense.
Data from LSL Property Services, the parent company of E.Surv Chartered Surveyors, Your Move and Reeds Rains estate agents, showed the average FTB in London and southeast England is 32 and has a salary of £41,616. The rest of the country has an average age of 30 and a much lower salary of £31,731. The average income of first time borrowers according to CML data is shown in Table 1, while interest payments as a percentage of income is shown in Table 2. Since the average nationwide salary is around £26,500 and four in five new jobs are in sectors that have an average pay of less than £16,640 for a 40-hour week, access to home ownership seems unattainable.
Government help
There are four types of government-backed home ownership schemes offered in England at present, while Wales, Scotland and Northern Ireland each have their own schemes.
With Help to Buy equity loans, FTBs and home movers alike are offered the opportunity to move to new-build homes with a purchase price of up to £600,000 if they can raise a 5 per cent deposit. With the equity loan scheme, it is not permitted to sublet the property, and it must be the buyer’s only property. The buyer must contribute a deposit of at least
