Second steppers still struggle to move up UK housing ladder

Despite improved conditions for homeowners ready to take their second step on the property ladder, an increasing number think it will be harder to sell their home this year, according to new research from Lloyds Bank.

Second Steppers are mostly couples and young families moving on from their first-time buyer flats to secure more space and a garden. But conditions for this group have improved as they prepare to take their next step on the property ladder. Higher house prices have increased the equity of those still living in their first homes, with 45 per cent feeling that their equity position has improved over the last year.

Today’s typical Second Steppers bought their first property in 2012, when the average price of a First-Time home was £140,004. Based on the latest house price figures, selling their home now for the average First-Time Buyer house price of £205,723 would provide them with an average equity of £105,068 – around two-thirds of which has been boosted by house price growth over the last four years, with the rest coming from the initial deposit and mortgage repayment.

This average equity of £105,068, which has more than quadrupled from just £23,643 four years ago, is equivalent to roughly a third of the average price of a typical three-bedroomed detached Second Stepper home (£331,796). Other factors have also improved for Second Steppers, including record low mortgage rates and better home affordability.

While market conditions have significantly improved over the past six years, though, buyers and sellers face fresh frustrations and lack of confidence in moving to the next step. Two out of five Second Steppers surveyed think it will be more difficult to sell their existing property this year compared to 12 months ago, versus just one in five in 2015. Around one in three are also considering staying put and improving their homes rather than moving.

The uncertain economic climate (26 per cent), struggling to save for a deposit (29 per cent) and finding the right property (32 per cent) are the main hurdles cited by respondents.

Andrew Mason, Lloyds Bank Mortgage Director, says: “Second Steppers are yesterday’s First-Time Buyers and the conditions to help them climb to the next rung on the property ladder are better than they’ve been for over four years. Despite this, many still feel that things are tough out there and that it’s getting more difficult to sell your first home and move up the ladder.”
 

Homeownership still the dream for Brits

28th October 2016

Homeownership is still the dream for Britons, confirms new research.

Generation Rent is the buzz word of the day, as a growing number of young people find themselves unable to afford to get on the housing ladder, but new research confirms that homeownership is the end goal for most Brits.

The study by the Council of Mortgage Lenders found that 72 per cent of adults want to be home-owners in two years’ time, while 80 per cent hope to own in 10 years’ time.

Analysis by CML chief economist Bob Pannell also highlights the positive perception of partial home-ownership, with shared ownership or shared equity regarded as a good idea by around half of all respondents – around five times the proportion who see it as a bad idea. More people see part-ownership as a stepping stone to full ownership than as a permanent tenure in its own right.

Nontheless, a majority of people – regardless of their own circumstances – feel that it is harder than it has ever been for young people to buy their own home. 75 per cent believe action is necessary to help first-time buyers.

Predominantly, people see government as having a responsibility, but mortgage lenders, house builders and local authorities are also widely regarded as having a role.

In terms of the specific measures favoured by those advocating action, special incentives to save for deposits topped the list, closely followed by introducing subsidies for all first-time buyers. Over a third favoured the measures of abolishing stamp duty, reintroducing mortgage interest tax relief, and requiring developers to discount prices of some new homes, among others.

 

1 in 4 joint buyers unaware of their home ownership status

29th September 2016

One in four people who have jointly purchased a property do not know their home ownership status, reveals surprising new research.

A survey conducted by Ocean Finance found that 34 per cent of adults in the UK – around 17 million people – have joint ownership of a property, but a quarter of those do not know or understand the legal ins and outs of their ownership.

When people buy a home together, they have two options: joint tenancy, which gives them equal rights over the property and 100 per cent ownership of the home collectively, and tenants in common, where each owns a fixed stake in the property, whether that is 50/50 or a different division.

“The benefits of buying a house together as tenants in common are becoming better understood by home buyers. With more couples getting financial support from families with their deposit, or putting in their own savings, splitting the ownership allows them to preserve their share. And for older borrowers it offers some protection from care costs,” says Ian Williams, spokesperson for Ocean Finance.

“The good news is that it isn’t too hard for joint tenants to split their tenancy if they need to. They can either download the forms from the Land Registry and do it or get help from a solicitor or conveyancer.”

 

Homeowners more confident about finding their long-term home

8th September 2016

Homeowners are becoming more confident about finding their long-term home in the UK.

The UK’s chronic shortage of housing, coupled with uncertainty surrounding the recent Brexit vote, are thought by some to have weighed down sentiment in UK property, with buyers cautious to purchase a property. New figures, though, have shown that first-time buyers have stepped up their activity, boosted by confidence and low mortgage rates.

Now, research from Lloyds Banks suggests that the upbeat mood is spreading to those already on the property ladder, with homeowners starting to feel more optimistic about the time it will take them to move into their long-term family home.

Whilst four out of five homeowners believe that they will have to wait longer to achieve their long-term aspiration than they would have a decade ago, the report shows that the number of homeowners thinking that has fallen steadily from 88 per cent in 2012.

Similarly, while this year’s study shows that four in 10 (41 per cent) believe the uncertain housing market has had an impact on housing aspirations, this number has fallen from 53 per cent in 2012.

However a third (33 per cent) said that they had expected to be further along the housing ladder than they currently are. The figure is higher for first-time buyers, with 43 per cent saying they were lagging behind their expectations.

Nonetheless, almost three quarters (74 per cent) now believe that they will achieve their long-term family home in no more than two more moves.

Andrew Mason, Lloyds Bank Mortgage Products Director, says: “Those who are further up the property ladder appear to be more satisfied with their progression, whereas those who are just starting out may feel that they have a mountain to climb before they reach their long-term home. Despite that, first-time buyers are in a slightly better position to move than they were a year ago and are the group most likely to be on the move.”

 

Millennials pay £44,000 more rent than baby boomers

19th July 2016

Milllennials will have spent £44,000 more on rent than baby boomers by the time they reach 30, reveals new research.

The study, by the Resolution Foundation, highlights the impact the housing crisis has had upon today’s new generation of would-be home buyers. Falling homeownership and rising rental costs mean that Millennials will have spent £53,000 on their rent by the age of 30, £44,000 than the £9,000 that baby boomers would have spent.

The analysis, published to mark the launch of the Resolution Foundation’s flagship Intergenerational Commission, warns that the drop in home ownership over recent decades that has reduced living standards for the young and led to a further concentration of wealth among the old.

Indeed, those born between 1946 and 1965 were the main beneficiaries of the growth in home ownership over the 20th century, with 63 per cent owning their own home by the age of 30. However, decades of falling housebuilding and rising house prices have reduced ownership for subsequent generations. Around 60 per cent of generation X owned their home by the age of 30, falling to 42 per cent of today’s Millennial generation.

This shift away from home ownership has left many more Millennials renting privately and has coincided with a sharp increase in the cost of renting. The analysis finds that millennials spend almost twice as much on rent as gen X-ers did at the same age, who in turn spent twice as much as the baby boomers before them.

The Foundation says that the extra spending on rent has reduced young people’s living standards and made it harder to save for a deposit for a house. It notes that that the extra spending on rent is more than the average deposit for a first-time buyer today of £33,000.

The Foundation has welcomed neW Prime Minister Theresa May’s acknowledgement of Britain’s ‘housing deficit’, in a speech where she said that unless action is taken “young people will find it even harder to afford their own home”.

It says that a major housebuilding programme is likely to find support across the generations, contrary to popular perception, and points to findings in the British Social Attitudes Survey that baby boomers’ support for homes being built in their local area has almost doubled in recent years, from 29 per cent in 2010 to 56 per cent in 2014.

Laura Gardiner, Senior Policy Analyst at the Resolution Foundation, says: “The nation’s housing crisis is perhaps the most visible example of growing inequality between generations. Young people today are paying a heavy price for decades of falling home ownership. The struggle to get on the housing ladder has left many of today’s millennials renting, at a time when it has become more expensive to do so.

“Britain’s continuing failure to build enough homes means that unless we change course the struggle of young people to own their home is only going to get worse.”

“A sustained programme of housebuilding to cut Britain’s ‘housing deficit’ would send out a clear message from the incoming Prime Minister that she is committed to repairing the social contract between generations,” adds Gardiner.

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