Over a third of potential buyers are trapped in the rental market as they cannot afford to get a foot on the property ladder.
A survey by TheRoyal Institution of Chartered Surveyors found that 38 per cent of potential buyers cannot afford to take the first step while a further 20 per cent are seeing their purchases fall through due to difficulties with mortgage finance.
The global residential director of RICS Peter Bolton King says: “Many first time buyers are facing the prospect of a property ladder with no rungs. With lenders requiring such hefty deposits and affordable mortgage deals out of reach for most, a generation of potential homeowners are facing an uphill struggle. Without allowing more first time buyers to enter the market, chains will continue to stall and transaction levels will stagnate.”
RICS notes that, since the government’s NewBuy scheme only applies to newly built properties, a large number of properties in the UK remain out of reach for most first time buyers.
Bolton King proposes an extension of the NewBuy scheme that could help overcome these immediate problems: “RICS would like the government to consider a mortgage indemnity scheme that works for the whole market, not just new build. NewBuy could potentially lead to market distortion by reducing demand for second hand property. Without allowing first time buyers greater access to the second hand market, chains and transaction levels will continue to stagnate.”