Breaking through: the challenge to afford the first rung on the property ladder

First-time buyers are vital to the home buying landscape and yet, too many people in the UK struggle to afford their own home. Skipton Building Society was founded with a purpose of helping people into homes and today that purpose remains true and is a key strategy behind the innovation you have seen from us in recent years. We’re continually striving to help more first-time buyers onto the housing ladder, our Track Record and Income Booster propositions, our first-time buyer product range and our ability to lend on new build houses and flats at 95% LTV (or with no deposit using Track Record) are all testament to that.

But our work doesn’t stop there. Our Affordability Index highlights the challenges facing first-time buyers. Nearly 90% of potential first-time buyers can’t afford to buy a typical first home in their local area based on their personal financial situation alone (i.e. without help from Bank of Family).  Unsurprisingly, 9 of the 10 most affordable areas for first-time buyers are in Scotland, but more of a surprise is that 6 of the 10 least affordable areas are in Wales – not London as you might expect.

Upcoming stamp-duty reforms will exacerbate the situation. From 1st April, the stamp duty threshold for first-time buyers in England will fall from £425,000 back to £300,000 and our analysis shows the proportion of Local Authorities areas in England where the average first-time buyer home will attract stamp duty is set to almost quadruple overnight from 8.4% today to 32%. And by the end of 2027, this is forecast to increase to 42% as house prices continue to grow – making stamp duty no longer a challenge for just London and South-East first-time buyers.

Skipton Group’s Affordability Index tool has been designed in conjunction with Oxford Economics, combining data from ONS, Bank of England and Skipton Group to develop a unique Index that doesn’t just measure the affordability of trying to buy a property in Great Britain, but the affordability of running it too, looking beyond house prices and household incomes, including moving costs, household savings and essential housing costs.  It gives granular insight, down to Local Authority Level (that’s 363 areas across Great Britain) and brokers can use our tool to look across housing tenures, age, income, location and family type to see how affordability fluctuates based on different circumstances.

This is the second iteration of the Skipton Group Home Affordability Index and we’re really proud of the granular level of analysis it provides.  Once again, this Index has laid bare the scale of the challenge facing first-time buyers but we’ve also worked hard to provide a useful tool that will add value to brokers’ discussions with customers.

Our next big job is to share these findings with Government and policy makers – we are standing ready to inform and contribute to the wider conversations around how we’re really going to start improving access to the housing market for first-time buyers. Looking to dive deeper? Our BDM team are ready to answer questions and help brokers integrate affordability insights into their client discussions, get in touch today. 

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