First-time BuyerJun 18 2018

First-time buyer numbers are down by two million

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First-time buyer numbers are down by two million

First-time buyer (FTB) numbers are down a massive two million over the last decade, lender Kent Reliance has revealed.

In the last 10 years, two million fewer first-time buyers have been able to buy with a mortgage than in the 10-years prior to 2008, according to Kent Reliance's data.

The figures, which were released on Friday (15 June), are a part of the eighth edition of Kent Reliance's Buy-to-let (BTL) Britain report.

The data showed that over the same period, the private rented sector (PRS) grew by 2.2 million households as the ongoing affordability crisis for first-time buyers continued to support the long-term growth of the sector.

In fact, just over 363,000 first-time buyers used a mortgage to buy a home last year, which is still 94,000 fewer than the typical number seen in the 10-years prior to the financial crisis, despite an increasing population.

Without a sustained recovery in first-time buyer activity, this means 940,000 fewer people will purchase their first home over the next decade than in the 10-years before the financial crisis, according to Andy Golding, chief executive of One Savings Bank, which trades under the Kent Reliance and InterBay brands.

Mr Golding said: "First-time buyer numbers, despite recent fanfare, are a long way from pre-recession levels and with household numbers growing, and new housing starts inadequate, it is the private rented sector that will continue to pick up the slack.

"Policy should recognise that, and support growth in supply across all tenures."

The report also outlined how the value of the private rented sector in Great Britain failed to increase in the last quarter, as house prices fell and the sector grew more slowly.

It currently stands at £1.4trn.

The report claimed the combined effects of higher stamp duty costs, reforms to the tax treatment of mortgage interest, and tighter lending rules are responsible for the slowdown.

The number of households in the sector increased by only 3 per cent in the last year, to 5.7 million -  far less than the rate of increase seen over the past decade. 

Steven Sibley, director at Berkhamsted-based Highclere, said: "This is very interesting data from Kent Reliance, and it does seem to follow the trend. I do feel that there are a few reasons for this.

"Firstly, lenders have now either introduced credit scoring or reduced their income multiples, which has dramatically reduced peoples borrowing capacity especially for first-time buyers.

"Secondly, I find that first-time buyers tend to have more outstanding credit than say 10 years ago, which again will reduce their borrowing capacity down.

"Thirdly, more of the first-time buyers I deal with are self employed, which causes problems, as lenders typically want two to three years of accounts and tend to take an average of the last two years net profit. 

"Last, but by no means least, the dramatic increase in house prices which have constantly outstripped wage increases over the years has exasperated the whole situation.

"Therefore, as raising finance becomes more difficult, more and more people are being forced into renting, which, due to simple supply and demand logic, forces private rents higher therefore making it even harder for people to save money and get their foot on the housing ladder."

aamina.zafar@ft.com