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First Time Buyers

How Can We Help Young Homebuyers Get on the Property Ladder?
Author: Carl Shave - Director
Updated on March 12th, 2020

First time buyers in East Anglia

Back in 1990, 63% of young people aged 25-29 owned their own home. Today, in 2017, that percentage stands at just 31% – half the number of young homeowners in the UK 27 years ago.

With property ownership amongst the younger demographic in free fall, many people are worried about what these statistics have to say about our economy and what they mean for the UK’s younger generations. Will decades of renting leave our younger people more financially unstable than ever before? Why are property prices rising faster than average incomes? What does this mean for the future?

Why is the first rung a tricky step?

The factors behind the drop in house ownership amongst 25-29 year olds are multiple, but the key issues are tighter lending criteria (particularly following 2008’s financial crash) and the skyrocketing price of property compared to average earnings.

With few properties being built in the UK, despite Government initiatives, property is more in demand than ever, pushing up prices significantly as wages remain comparatively stagnant. This prices younger people out of the property market, as paying rent drains their incomes further.

Although 33% of younger people in this age group do own their own homes, many did not achieve home ownership independently. “The Bank of Mum & Dad” often plays a role in property purchases by this demographic. Today a third of first time buyers used a gift or loan from their parents to buy property. Seven years ago just a fifth of first time buyers needed a hand out.

First time buyers on the rise

But it may not all be doom and gloom for younger buyers. In February 2017, 36% of all property transactions were undertaken by first time buyers, demonstrating that getting onto the property ladder is not an impossible dream.

As of February, property transactions made by first time buyers accounted for a third of the market, a figure not achieved since 2011. Buyers in the 25-29 year old category may be struggling, but buying property for the first time a little later in life appears to be entirely feasible and increasingly achievable.

But what if you want to get on the property ladder now and can not wait until your 30s or even 40s?

How to buy your first home

In January, Theresa May promised that thousands of new homes were to be built on brownfield sites to help first time buyers get on the first rung. Set to be completed in 2018, these new homes were announced in the same month that the Prime Minister committed to building 14 new garden villages and three new garden towns across the UK. This supposed influx of “affordable” housing has been a long time coming and many are sceptical about its delivery, but if the schemes are successful, young buyers could soon have more options.

In the meanwhile, however, there are a number of alternative schemes designed to help younger people and first time buyers clamber onto the property ladder:

  • Help to Buy Equity Loans
    The Help to Buy mortgage guarantee scheme may have closed its doors, but Help to Buy equity loans are still available. With a minimum 5% deposit, buyers can access a 5 year interest-free Government loan of a further 20%, helping first time buyers achieve that tricky first deposit.
  • Help to Buy London
    This option is identical to the Help to Buy equity loan but allows buyers in London to access a Government loan of up to 40% of the home’s value.
  • Help to Buy ISA
    If you are saving up for a deposit, the Government’s Help to Buy ISA is another option, with savings boosts of 25% (up to £3,000). If you save £200, the Government will top up your ISA with an additional £50, making saving a little bit easier.

Are you a first time buyer? Understanding the market thoroughly can help you get the best possible deal on your mortgage. Find your perfect fit with expert advice from The Mortgage Centre – Contact us today

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