There’s no doubting that various governments over the last decade or so have tried to tackle the shortage of first-time buyers getting onto the ladder in a variety of ways.
Some might suggest that these schemes and incentives have essentially been skirting around the edges of a more fundamental problem, that is the level of house prices, the lack of wage growth during that period, and the difficulty individuals have in both saving for a deposit and meeting the tighter affordability mortgage criteria.
Indeed, many argue that the schemes themselves – Help to Buy for instance – have exacerbated the problem keeping house prices artificially high which ultimately makes it more difficult for prospective purchasers.
We might have some sympathy with this view, but given the UK economy is somewhat in thrall to keeping house prices at a certain level, and the greater use of the home as an asset (particularly and increasingly in retirement), it’s not really surprising that governments do not want to preside over a house price crash.
Given this starting point, it is no wonder that our FTB-focused schemes tend to concentrate on how to help borrowers save and greater incentives to purchase – just look at the HTB Isa and the eradication of stamp duty.
Just recently, James Brokenshire MP proposed allowing individuals access to their pensions to top up their savings to meet deposit requirements and, while it might have been met by howls of outrage in some quarters, there is no doubt that owning a home by retirement will save thousands of pounds in rent over the course of a working life and past that.
Many might be worried that the pensions of these people will never recover by retirement but what is more important to that person? Owning a home – whose value they could then access in retirement – or keeping that money in a pension? It might not please the pension industry, but I suspect that, for those in their 20s, 30s, or 40s who do not yet own, getting on the housing ladder is more of a priority.
And would giving access to pensions be any more of a risk when say compared to taking out a 40-year loan, or going for shared ownership, or opting into the HTB scheme and hoping house price inflation continues to grow? All have been cited as potential risks for Joe Public, but all could also mean they get that first property and can ‘build’ from there.
Let’s not forget that circumstances can change a lot over the course of a home-owning life and indeed many people move off that first rung very quickly. The point is that each individual – with proper, professional advice – can weigh up the risk and take a view. For some, the overwhelming priority to purchase outweighs the risk and my view is that, as long as they are fully aware of those risks, they should be allowed to utilise the money they have to make the purchase they want.
Pad Bamford is Business Development Director at AmTrust Mortgage & Credit