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Will policies to help first-time buyers work?

Journalist: Callum Mason, i

ended 28. December 2023

According to The Times, the government is planning on introducing several policies to help first-time buyers in the Spring.

The policies could include:
- Government support for much longer fixed-term mortgages to reduce how much first-time buyers must find for a deposit. Such schemes are common in the United States, where mortgage rates are often fixed for 30 years and government protection against default reduces requirements for large deposits.

-Resurrecting a version of the Help to Buy Scheme

- Stamp duty changes (although FTBs don't pay this on purchases below 425k.)

Will these policies help first time buyers get on the ladder, or will they simply push up the price of properties, negating any help they offer? Are there alternatives that would work?

13 responses from the Newspage community

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Justin Moy
Managing Director at EHF Mortgages
Any intervention of this type seems to focused for first time buyers, and needs to extend to all home buyers. Many are stuck in their current homes through schemes like Help To Buy, as their ability to move up the property ladder or repay an equity loan requires huge increases in income. Longer term fixed products will provide a small minority with a solution, but for the bulk of new homeowners there needs more smaller 1 and -bed properties built, matching prices to incomes without the need to inflate budgets with equity loan schemes.
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Riz Malik
Independent Financial Adviser at R3 Wealth
The intention here is not to help first-time buyers. The intention here is to win votes. This may have been effective in summer but now it is too little too late. If these measures were going to boost the housing market, why wait until now when we have been crying out for something all year? Also, the difference between 15 / 30-year swap rates and 5-year rates is minimal, casting doubt on the benefits of longer-term fixed rates. The government lacks a deep understanding of the housing sector and is resorting to desperate measures.
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Mike Staton
Director at Staton Mortgages
There needs to be more schemes available to the whole spectrum of buyers. Whilst the Help to Buy scheme was great to get people on the ladder, this scheme was heavily abused by greedy builders who wanted to cash in on the naivety of most first time buyers. A scheme to assist people in downsizing would be a great idea, assistance with solicitors fees, stamps duty would help free up properties for families wanting to upgrade. These benefits could be easily provided by the banks who should shoulder some of the responsibility of stimulating a slow market
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Emma Jones
Managing Director at Whenthebanksaysno.co.uk
Homeownership needs to appeal to first-time buyers over renting again. Having more control over budgets with longer-term fixed rates may be the way to encourage this. There has been a reduction in Newbuild purchases due to the lack of help to buy so I would like to see more schemes similar to this coming forward in 2024 to help those with affordability issues onto the property ladder in more restrictive areas eg the South where prices are inflated somewhat. More input from the government is welcomed but it should come sooner.
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Craig Fish
Director at Lodestone Mortgages
Do the government honestly think they can pull the wool over peoples eyes. This is simply a ploy to try and win votes and nothing more. All homeowners need help in order to get the housing market moving again, and the lack of supply needs addressing. Successive governments have always failed to build enough homes and until this is dealt with I’m afraid property prices will always be excessive and a barrier to many first time buyers.
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Rohit Kohli
Director at The Mortgage Stop
None of this makes any difference in the long term without a proper strategic plan that delivers affordable quality housing in areas that need it. Whilst steps to help first time buyers are welcome there needs to be innovation to help people looking to move who are also struggling. This government doest’t have any ideas left and is just posturing for headlines.
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Harps Garcha
Director at Brooklyns Financial
The government needs to focus on the whole housing market rather than just the First Time Buyer sector, otherwise, it will just be another short-term solution A long-term strategy needs to be thought through and implemented

The Help-To-Buy assisted mainly First Time buyers, however, it has now left many of them trapped as they are hard to repay or refinance due to income/affordability constraints or complex re-mortgage process for the equity loan part. The real beneficiaries of the scheme were the developers.

The new approach needs to support all buyers whether they are First Time Buyers or Home Movers and must include second-hand homes.

In my opinion, a new initiative down the 'Shared Ownership' route would be a good starting point.
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Graham Cox
Director at Bridging Hub
Longer fixed-term mortgages could be a useful option if it helps reduce deposit requirements. But so would lower house prices, which would be far and away the best solution. We need policies to stop house prices rising inexorably and maintain them at current levels for a perhaps a decade or more. Certainly not a resurrection of Help to Buy. When it was introduced in 2013, property values shot up. All it does is make property more expensive for first-time buyers, whilst swelling house builder profits.
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Charles Breen
Founder at C B
The governemtn whatever they will do shouldnt bring back help to buy, or as it should be more accurately titled help to sell, as all it did was increase the profits of the developers, taking their average profit per property in 2010 from 35K to over 70K today!!
If the governemtn really wanted to make a difference to first time buyers then reforming planning laws to stimulate more building is the solution but this is too long term and dosent fit within the next election cycle to take effect.
What would make a real difference is relaxing affordability rules further for first time buyers, or a real intervention in forcing developers to sell houses to first time buyers at a reduced rate, similar to the key worker scheme, so that first time buyers get a reduced purchase price which can be used towards their deposit. but then the goverment will just do what their paymasters say and that has always been the developers, he who pays the piper calls the tune!
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Gary Bush
Financial Adviser at MortgageShop.com
The government needs to stop fiddling around the edges of the First Time Buyer property market and simply ensure more "affordable" houses are built. The last meddling, Help to Buy, did nothing but help large corporate builders fill their boots - the average new build price under this scheme was higher and now those same buyers are looking down the barrel of a gun marked potential negative equity as they juggle with their mortgage debt and repaying the government its assistance loan. If I were the government I'd stick to Shared Ownership and actually meeting their build target.
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Ross McMillan
Owner/Mortgage Advisor at Blue Fish Mortgage Solutions
The perpetual focus on incentive schemes for first-time buyers consistently fails to address the real obstacle to those wishing to step onto the property ladder...namely the supply of available and affordable housing at all levels of the market.

With rates falling and 95% LTV mortgages readily available, affordability and the ability to obtain a suitable agreement in principle for the average first-time buyer is not typically the challenge...the real struggle begins with the stark reality of a seriously undersupplied and subsequently ultra-competitive market.

Relaxation of planning regulations and - particularly in Scotland - a revision of disastrous government housing policies over several years that actively discourage and restrict private investment in building new homes rather than incentify are the kinds of measures that could have lasting positive impacts rather than short-sighted, short-lived sound bite schemes that yet again fail to address the core issues.
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Sofia Jones
Mortgage & Insurance Adviser at Penny House
Help to buy over inflated prices when it was introduced previously, a policy to push up the prices of starter homes isnt the answer. Government support for longer fixed terms or stamp duty cuts or a policy that would benefit all home movers would be better. Home owners wishing to downsize are often put off with the costs payable (stamp duty / professional fees).
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Scott Taylor-Barr
Principal Adviser at Barnsdale Financial Management
The big issue with supporting first-time buyers is and always has been, what impact does that have on property inflation? Do you just ultimately make matters worse and end up with a market where some form of Government scheme is always required to help people get on the property ladder; this is what we saw with Help-To-Buy, so I'm not convinced that this is a scheme that helps anyone other than the large national housebuilders, who can charge higher prices off the back of the support being given. A national campaign and a boost to funding for shared ownership could be a longer-term way of helping people buy homes without artificially inflating house prices; it is a scheme that is already in existence but is underutilized. I'm also not convinced how longer-term fixed rates help; we already have schemes with 5% deposits or even no deposit; fixing people for 30 years isn't going to change the underlying regulations which are the main source of friction, stopping lenders in this area.