The UK’s housing market has been one of the biggest surprises of the global pandemic. With the government’s Stamp Duty Land Tax holiday, announced July 2020 and initially scheduled to end March 30th 2021, buyers were desperate to move in time to meet the deadline.
It is, therefore, no surprise that for the first three months of 2021 nearly half (42%) of all mortgage lending went to home movers, according to the Financial Conduct Authority (FCA), the highest share since records began in 2007. This was up by 27% of lending a year earlier. In contrast, first-time buyers’ share of loans was up by just two percentage points in the same period.
As a result of the pandemic, existing homeowners have not only been able to save money, they’ve also been in a fortunate position allowing them to play the market. As property prices have continued to soar due to demand outweighing supply, house buyers have been undeterred and have used exceptional resources to outbid rivals for their desired house purchase.
In actuality, in most cases, any savings made by the stamp duty holiday have been negated by the increase in house prices, yet as the pandemic has forced people to re-evaluate what’s important, the ‘race for space’ has never been more vital.
Unfortunately, first-time buyers (FTBs) have continued to struggle. With higher loan-to-value (LTV) mortgage products quickly withdrawn by lenders last year, the increase in house prices has meant that without a significant deposit FTBs have had to put their plans on hold while the market booms.
According to the Resolution Foundation, it currently takes the average first-time buyer 21 years to build up a deposit if they save 5 per cent of their income. In the early 1990s, it took four years.
However, a pledge by the Conservative party to turn ‘Generation Rent’ into ‘Generation Buy’ has seen the launch of several new schemes this year (2021).
The ultimate goal has been to help support first-time buyers in their desire to get onto the property ladder, including:
• 95% mortgage guarantee scheme
• Help to Buy: Equity Loan
• First Homes scheme
They have also provided a designated hub to help advise and guide buyers on what schemes are available to them at ownyourhome.gov.uk
Many industry experts believe that as the tapering of the SDLT holiday has now begun (and from October 1st only first-time buyers will get stamp duty relief on property worth less than £300,000) first-time buyers will now begin to regain their competitive advantage, with demand from second and third-steppers predicted to subside.
