The outlook is getting better for first-time buyers as more landlords leave the market. Due to expensive new legislation and higher mortgage rates, landlords no longer see their holdings are financially viable. Creating new opportunities for first-time buyers to access less expensive properties, more people will be able to get onto the property ladder sooner.
First-time buyers have been excluded from the market
After landlords snapped up the affordable properties to rent out, many first-time buyers have been unable to get onto the ladder. Instead of their first purchase being a modest flat or house, like in previous generations, first-time buyers have had to look at bigger properties instead. This meant saving longer for a deposit and earning enough to secure the required mortgage. As of 2021-22, the average age of a first-time buyer is 33 years old, but access to smaller and affordable properties could see this come down in the future.
Landlords are making their exit
Landlords are facing rising compliance costs associated with new regulations. These additional expenses combined with various other costs such as maintenance, insurance, and taxes have dramatically impacted landlords’ profitability. Now, following spikes in mortgage repayments and the recent base interest rate increase, the return on investment for landlords is even less. But reducing the dominance that landlords have held in the market over recent years opens the potential for first-time buyers to come back.
Changing market dynamics
The property market is changing and the shift in buying trends has seen the market pause and observe. Keeping the market moving is essential during changing times. The entry of first-time buyers will address the need for purchasers at the lower end of the market where landlords have left. In addition, having affordable properties available to buy with renting costs on the rise encourages more renters to purchase their own homes.
New opportunities for first-time buyers
As landlords sell their properties, first-time buyers gain new opportunities to enter the market. We are likely to see this move over time, as the market waits to see how current conditions affect mortgage rates and property prices. However, when both lender and consumer confidence is restored, the new-found accessibility to affordable properties will boost first-time buyer activity, helping to stimulate the market once again.
The impact on the market…
Our COO, Oliver Meddick, explains: Enabling first-time buyers to purchase at more affordable levels can have a huge potential impact on the housing market. When they step onto the property ladder, it triggers a series of cascading effects that push the entire property chain forward. It may only be a temporary solution for first-time buyers as they outgrow the smaller properties, but it enables existing homeowners to progress in their own property journeys. The pattern continues up the ladder, boosting overall activity in the housing market.