ROOF Blog

The number of first-time buyers has dropped to its lowest point in a decade despite a significant rise in the number of affordable homes over the past year, according to figures released by the Halifax. Tighter mortgage lending criteria, recent price rises in some areas and lack of money for a deposit meant that an estimated 185,000 first-time buyers entered the market in 2009, four per cent fewer than in 2008 and just over a third of the 532,000 who bought when prices were soaring in 2002. These combined obstacles have pushed up the average age of a first-time buyer from 29 to 30, while the typical age of those buying without financial help from family or friends has risen to 36 from 33 in late 2007.

Struggling buy-to-let landlords are eating humble pie when it comes to finding tenants.

Checks and references traditionally carried out on tenants to assess their reliability in paying up are now being reversed as renters seek assurances the owner of their new home is legitimate and not on the verge of being repossessed.

David Underwood, a lettings consultant at Darwoods in St Albans, Herts, has noticed a ‘marked shift’ in emphasis:

‘Tenants have been far more interested in landlords’ backgrounds and are asking more questions about where their deposit is being held,’ he says.

It would seem that tenants’ concerns are well founded. When the Council of Mortgage Lenders (CML) started compiling buy-to-let data in the second half of 2005, only 200 investment properties were in mortgage arrears of three months or more.

By the first half of this year, this had soared to 5,400. Repossessions of investment homes also climbed, from 400 to 2,800, during the same period.

Housing benefit should be converted to a £17,000 lump sum grant to enable poorer people to put down a deposit on a home, think-tank Demos has suggested. In a report, Recapitalising the poor, it argues that it this would help end the ‘culture of dependency’ that dominate poor communities. It also said that part of the income tax paid by low earners should be ringfenced and put into a private pension to remove them from the system of means-tested pension credit when they retire.

Research out today has found first-time buyers are taking out loans to afford the deposit. Thirteen per cent of 18- to 34-year-olds are considering buying a property for the first time in the next year, but of those, 16 per cent say they will consider taking out a loan to cover the deposit. Critics have warned that it is a ‘dangerous move’ and have called for lenders to assess the affordability of a mortgage on a case by case basis. The average deposit for a first-time buyer is £32,000.

Research from the National Association of Estate Agents has revealed that nearly one in four people claim they are unable to get a mortgage due to the tighter lending criteria being used by banks and building societies. More than half of those asked believed that they would have more change of getting a mortgage if lenders had relaxed tough restrictions and accepted lower deposits.

The Council of Mortgage Lenders (CML) said lending has started to pick up again after the number of home loans for house buyers rose by 4 per cent in May. In year on year figures this is still 28 per cent lower than a year ago. The CML said that nearly three-quarters of new mortgage are being taken out at fixed rates, the highest proportion since August 2007, and movers typically borrow 67 per cent of the value of the property. First-time buyers still need an average deposit of 25 per cent, and figures indicate that 80 per cent of first-time buyers under the age of 30 were receiving financial help from their parents.

Lender Britannia has boosted the mortgage market after introducing a new home loan offering 90 per cent loan to value. Available from today, the two-year fixed rate mortgage requires only a small deposit, seen as essential to help first-time buyers into the market. Nationwide has also announced it is launching tomorrow a new two- and three-year tracker deal for existing customers who are coming to the end of their loan, at 95 per cent loan to value.

The National Association of Estate Agents has accused the government of doing too little to help first-time buyers into the market and undermining the chance of a housing recovery. Research by propertylive.co.uk found that while the cost of mortgage finance has fallen to a record low, lenders are asking for such large deposits that the first rung of the property ladder remains out of reach. Nearly seven out of ten first-time buyers have given up hope of ever owning their own home. Of those who expect to buy a home, only 15 per cent think it will be in the next two years, and 5 per cent think it will be at least five years before they can afford it.

Private tenants are routinely being ‘conned’ by letting agents imposing unjustified fees for providing a poor or nonexistent service, a report from the Citizens Advice said today. It said that it was dealing with 6,000 tenants’ complaints a year regarding letting agents, and that the behaviour of some is ‘out of control’. The report has found that 94 per cent of agents imposed up to seven additional charges on tenants, not counting the deposit and rent in advance, costing up to £600, and some agents were caught billing tenant and landlord for the same service. Citizens Advice wants the government to extend the recent regulation to include a ban on additional charges.

Meanwhile Abbey National, the country’s second-largest mortgage lender, has announced that it will relax lending criteria on its most popular loans tomorrow. It is lowering the minimum deposit required for its best fixed rate deal from 40 to 30 per cent. The move comes as the Bank of England said that recovery in the economy would be slow and protracted, with low interest rates around for at least another year according to analysts.