There have been many initiatives to help first-time buyers, but now we need assistance for those older homeowners looking to buy and sell
The latest figures from UK Finance have revealed that 2018 saw first-time buyer numbers hit their highest level in 12 years, despite Brexit uncertainty.
But while this news is really positive, the rest of the purchase mortgage market is much more stagnated. Brexit uncertainty continues to have a huge impact, with many would-be homemovers reluctant to look for new properties if they do not need to.
This is highlighted by the huge increase in remortgage figures – up 10.8 per cent in 2018.
Much of this rise will simply be down to borrowers locking in low rates, but it can also be attributed to people choosing to borrow more to extend and improve their existing properties rather than move home.
First-time buyer mortgages are strong because there are a huge number of incentives aimed at this market – particularly those looking to buy a new build. Help to Buy has helped more than 150,000 first-timers get on to the property ladder, while other government schemes such as the freeze on stamp duty have also had a significant impact.
But there is a noticeable lack of incentives for the rest of the market.
Freeing up housing stock
There have been calls for a stamp duty freeze for people looking to downsize in order to encourage older homeowners in big family homes to free up that housing stock for second- and third-steppers.
But this has not happened. Instead, we have seen a huge increase in the number of older homeowners opting to release capital via equity release.
This is not a sustainable model. Where are all the FTBs going to go next? Many – particularly those on the HTB schemes – will be looking to move on once their interest-free five-year term is up, paying off their government loan as they go. But without the rest of the market moving, they are going to struggle to take that next step.
The market needs to look at ways of freeing up some established residential stock for FTBs. One solution is part exchange – where new build developers purchase a potential buyer’s existing property from them. We have seen a significant increase in the number of buyers making their next move this way.
Those developers offering part exchange schemes are finding they are able to shift their properties much more quickly as they have that extra option for buyers who are interested but worried about the stress of selling their own home.
This is particularly the case with the older age group, many of whom are less able to cope with the stresses and strains of negotiating with estate agents, potential buyers viewing their family home, and the long drawn-out process of offers that may then simply fall through.
And not only does part exchange benefit the buyer, as they are guaranteed a sale of their property with no estate agency fees, it is also beneficial for the housebuilder, as they have secured a sale on their new property too.
By offering part exchange, housebuilders benefit from improved cash flow. It also frees up valuable capital and provides short transaction timescales and turnaround times, as contracts are exchanged quickly, with delayed completion being arranged where necessary.
I realise that not everyone wants to live in a new build but, for many, it can be the best option, so finding ways to help these buyers is the way forward.
Advantages of new build
For the older generation, downsizing into a newly built property, which needs little or no maintenance, is becoming more and more attractive.
For others, the idea of moving up the property ladder into an energy-efficient, low-maintenance family home can be a real draw.
Whoever the buyer is, schemes such as part exchange or assisted move make buying a new build easier and take the problem of selling a property away, making the process much less stressful and often less expensive.
What is more, in uncertain times, a guaranteed buyer can offer the security those who have been reluctant to move have been looking for.
If we can encourage more people to use schemes like this, we could see a really positive shift in the housing market as a whole.
Neil Knight is business development director at Spicerhaart Corporate Sales/PX and Assisted Move