Making homeownership attainable for first-time buyers, Mark Knight, Chief Executive, addresses the housing crisis
“Get Britain building again” is Labour’s rallying catch cry with a pledge to build 1.5m new homes during the lifetime of this Government. Crucial to this agenda is making housing more affordable for all, particularly first-time buyers (FTBs), who are key to unlocking broader market recovery.
The challenges facing first-time buyers
In recent years, prospective homeowners have faced a turbulent market. Political instability, with three prime ministers in quick succession, frequent economic policy U-turns, rising interest rates, and a cost-of-living crisis, have eroded buyer confidence. While affordability at all levels of the housing ladder has worsened, first-time buyers have been hit hardest.
The affordability crisis for FTBs escalated in 2023. With rents hitting an all-time high, up by 7.3% year-on-year in 2024 according to the latest ONS data, it’s been increasingly difficult for buyers to save for deposits. Full-time employees in England now face house prices that are 8.3 times their average annual earnings, leaving many FTBs priced out of the market and struggling to secure a mortgage.
The 2022 mini-budget also sent shockwaves through the market, with mortgage rates surging from around 3.66% to over 6%. This caused mortgage lenders to pull products from the market, making homeownership even less accessible. The end of the Help to Buy scheme (HtB) in 2023 removed a key support mechanism for FTBs, narrowing affordable homeownership options. The HtB product was very successful and carried no burden to the taxpayer, with loans now being paid back. However, it remains unclear where the returns from these loans have been allocated, raising questions about whether these funds could be reinvested into housing initiatives to further support FTBs.
Beyond macroeconomic pressures, an overly bureaucratic planning system has exacerbated the housing issue by delaying the delivery of new homes. These delays are especially acute in high-demand areas, leaving many FTBs trapped in the rental market, unable to make the leap to homeownership.
Looking at the solutions
1. The role of new-build homes
New-build homes can provide a more affordable alternative. Gleeson's homes, typically priced around 20% below the regional market average, offering FTBs a more attainable path to homeownership. With many households renting or stuck on local authority waiting lists, affordable homeownership is crucial in helping alleviate pressure on the rental sector
2. The need for collaboration
There also needs to be more of a coordinated effort between policymakers and housebuilders. While government-backed initiatives such as Own New and Shared Ownership offer alternatives for those without access to traditional financing options, we still need more incentives that stimulate homeownership and enable potential FTBs step on to the housing ladder.
3. Empowering FTBs with financial tools for homeownership
In addition to addressing affordability, it's important to incentivise FTBs to make the most of existing financial tools, such as Lifetime ISAs, that will help them achieve homeownership. Greater awareness and targeted incentives - such as matched government contributions for new-build homes - could encourage more FTBs to use these tools, making homeownership more achievable.
To stimulate FTB activity, we must restore market confidence, to ensure they feel secure in their ability to afford and maintain new homes. Affordable mortgages, targeted financial advice, and government-backed schemes can provide the stability and assurance FTBs need to commit to homeownership.
The role housebuilders can play
Housebuilders like Gleeson Homes can play a significant role in improving affordability for FTBs. With an average home selling for £185,700 - 34% lower than the regional average of £281,000 – Gleeson ensures that couples earning the National Living Wage can afford a home across all our developments. By ensuring mortgage payments as a percentage of take-home pay are more manageable for those in lower earning brackets, we help FTBs transition into homeownership while supporting broader market recovery.
Challenges remain but early signs of recovery are emerging, thanks to political stability under the new Labour government, and steady interest rates. Despite that, the government must introduce fiscal support to alleviate the burden of rising mortgage costs and inflation. This, combined with meaningful planning reform, will go a long way in ensuring FTBs can achieve home ownership.
We all need to play our part, to bring market confidence back - to stimulate the thousands of FTBs that have the affordability, and just need the confidence and security to buy and afford to run their new home. Housebuilders and policymakers need to better collaborate to make homeownership a possibility for all, regardless of socioeconomic circumstance.
Labour’s planning reforms, combined with a renewed focus on affordable housing offer a clear path forward, but this is just one element of stimulating increased house-buying activity. As put by Angela Rayner at the 2023 Labour Party Conference, “A secure home is a game changer and crucial foundation for a good life” and we are committed to unlocking the market for FTBs and to secure a stable future for the UK housing sector.
