Applications for the government-backed Help To Buy: Equity Loan scheme ended at the end of October. So what’s next for first-time buyers?
At a Norwich & District Association of Estate Agents (NDAEA) training day on Wednesday, November 2, members were able to give their thoughts to a panel led by NDAEA chair and partner at Arnolds Keys, Jan Hÿtch, Frank Davey of Allgood & Davey, Nicholas Taylor of Hadley Taylor, Ollie Dack of The Mortgage Advice Bureau, and industry trainer Martyn Baum.
How effective has Help To Buy been for helping first-time buyers get on to the property ladder?
It has been a big help. First-time buyers are the lifeblood of the market, and the Help To Buy scheme has helped thousands get that first foot on the ladder, which has had a beneficial knock-on effect right through the market.
If the gap left by Help To Buy is not filled, it is quite likely that we will see developers reining back their building programme which, in the current situation of a lack of supply, would be bad news for the whole market.
Is its absence going to make it more difficult for first-time buyers to purchase a home?
In the immediate aftermath of the closure of the Help To Buy scheme, we are going to see a reversion to relying on the bank of mum and dad (or grandma and grandad).
We are already seeing builders becoming more reliant on shared ownership programmes, but this is dependent on the funding being available for this, either privately or through housing associations, which are themselves being squeezed financially.
The new First Homes scheme is set to replace it, offering a 30pc discount to first-time buyers and key workers. What do you know about the local availability of this scheme, and how effective do you think it will in helping Norfolk buyers?
The First Homes scheme provides a guarantee for lenders in the hope that they will be able to offer higher mortgage-to-value loans, up to the 95pc which Help To Buy effectively offered.
In Norfolk, there are currently no First Homes schemes operating, and it seems that housebuilders are not engaging with the programme in the way that they did with Help To Buy. With rising interest rates, buyers may also be reluctant to take on a 95pc mortgage at full commercial cost – remember that the Help To Buy Scheme enabled them to borrow up to 20pc of the home’s value interest-free for the first five years, which provided a significant cushion in those vital early years.
There has been some criticism in the media about the First Homes scheme’s price limit of £400,000, but that is not really a big issue in Norfolk, where the vast majority of first-time buyers are spending less than that.
Michael Gove is back in post as Secretary of State for Levelling up, Housing and Communities. Do you think he’s a good choice for what the housing market needs? What did you think of his previous tenure in the same role?
What we really need from our housing minster is for them to stay in post for more than the blink of an eye. The housing market needs stability, and we have had precious little of that in Whitehall in the last few years.
Whatever you think of Michael Gove’s politics, he does have a reputation as someone who gets things done, and as a thinker, which is encouraging. If he can stay in the job long enough, he may yet deliver some good results.
Housing is something that everybody is invested in, emotionally or otherwise, as everyone needs a home, so Gove’s job is certainly political because it has an impact on every voter. We could actually do with a little less politics and a little more delivery in the role of housing minister.
Overall, though, we could do worse than Michael Gove in the post.
What hopes do you have for the trio – Rishi Sunak as PM, Jeremy Hunt as Chancellor and Michael Gove as Housing Secretary – in bringing stability to the market?
Rishi Sunak has already brought (relative) stability compared with what came before, but there is no escaping that he has inherited a mess. As chancellor he was adept at dealing with a crisis, and he is well-qualified in a financial sense, but the job of prime minister is much wider than that.
There remains the question of the extent to which stability can be achieved in the current global situation, with the energy crisis, war in Ukraine, and climate change all impacting on the UK. Finding stability in an unstable world is a real challenge.
For the housing market specifically, we will need sound economic management, a real long-term plan to tackle the lack of supply, and some certainty about the future.
What should the new cabinet’s priorities be when it comes to property and housing? Do you think more needs to be done to help first-time buyers, or should it be focusing more on things like energy efficiency, downsizing, etc?
Energy efficiency is an obvious priority, both because the energy crisis shows no sign of abating any time soon, and because of the pressing need to tackle climate change. The UK’s existing housing stock makes it extremely difficult to reach sustainability targets, so more stringent requirements on new homes will be key.
Supply remains an issue; not enough new homes are being built for a combination of reasons, including a shortage of construction workers (exacerbated by Brexit), shortages in materials, planning issues such as nutrient neutrality and economic uncertainty.
The housing market is driven from the bottom up, so help for first-time buyers will be key – especially as rising interest rates and stagnant wages will put pressure on affordability.
Are there any issues particular to the Norfolk housing market that you’d like Sunak, Hunt and Gove to tackle?
The problems in the housing market are generally national problems. We are fortunate that Norfolk is still growing, which should hopefully mitigate the coming economic downturn to an extent. But we do need a decision on nutrient neutrality to get new house building kickstarted again.