Customers helped

Home-owning dreams can come true

Updated 22 December 2022

4min read

Nick Green
Financial Journalist

For years the property ladder has been rising further out of ordinary peoples’ reach. But the latest figures are a ray of light, showing first home purchases at their highest for 10 years. Martin Stewart of London Money hails the comeback of first time buyers – and throws in a free buyer’s guide too.

We love first-time buyers at London Money. So much so, we’d like to create a special conservation area and slap a preservation order upon them. This area of outstanding natural beauty is something that the whole nation should celebrate – not just their parents for finally getting them to move out of the back bedroom!

It’s often said that an Englishman’s home is his castle; that’s certainly true regarding the cultural attitude we have towards property in this country. However, the dragon that is Buy to Let (BTL) has been roaming unchecked for the past 20 years, meaning that it is now likely that an Englishman's – person’s – home is generally someone else’s castle.

The financial crisis and credit crunch saw off many prospective borrowers; none more so than first-time buyers. According to Halifax, in 2008 there were 192,300 of them; the lowest recorded figure since records began in 1974. Compare this with figures from the Council of Mortgage Lenders (CML) who say there were 222,700 applications for BTL mortgages, and you can see why it has been difficult for the lesser spotted first-time buyer to get a foot on that oh-so-important first rung of the ladder.

Things got steadily worse from there.

A bank would once look upon you, a property virgin, as a potentially valuable asset, on which a long-term relationship could be forged for mutual benefit. However, they became less interested in the humble first-time buyer when the credit taps were turned off and the banks could see better margins in the unregulated, but highly lucrative, world of investor lending.

The evidence?

  • In 1985, only 9% of the population rented from a private landlord, compared to 22% in 2015
  • According to HMRC, 1.75 million people declared some form of property rental income on their tax return
  • It is estimated that the BTL army now own 4.9 million rental properties
  • Government figures show that between 1986 and 2012, around five million new homes were built. Of these, just over half are owned by private landlords and let

So if you have been looking to buy your first home, is it any wonder that you may have found it difficult and disheartening? I understand the need for a strong, healthy, private rental market. But I have never been convinced of the need for there to be nearly 2m Rigsbys (if you’re a first-time buyer, you’ll probably need to Google that reference!) running the show.

New hope for first-time buyers

It’s a very sensible question, given that the government's own figures suggest that by 2032 more than one in three properties will be owned by private landlords. But the times they are a changin’.

In their report at the start of the year, Halifax said that first-time buyer numbers were at their highest level for ten years, with an estimated 335,700 people purchasing for the first time in 2016.

Let me be the first to say, welcome back – you’ve been missed!

Why? Because in 2006, before the onslaught of the BTL Blitzkrieg, first-time buyers made up 36% of all purchases that were made using a mortgage. They are an essential element to the home buying process, fundamental to the property food chain. In short, without them, the whole house of cards is in danger of tumbling down.

We have now had three consecutive years where first-time buyer numbers have been over 300,000 in terms of purchases. The fightback is on; what’s more, you have had a very useful (if surprising) all, in the form of George Osbourne, former Chancellor of the Exchequer. Either by default or design, the changes he made to various forms of taxation, and allowable reliefs that Landlords benefitted from, mean that now, for the first time in decades, you have a level playing field.

End of the buy-to-let party?

What was once an unregulated market, and to some extent a licence to print money, the BTL investing has now become something of a dirty hobby. Where once the dinner party wags boasted of ‘portfolios’, ‘yields’ and ‘above market rents’ there are now just embarrassed coughs and a desire to move the conversation on to the shenanigans of Love Island.

Furthermore, the regulator and the Bank of England have landlords in their crosshairs, freeing up valuable properties for you to be able to buy – as a home.

Crocodiles as a species have been with us for millions of years. Private landlords (not that I’m comparing here) will no doubt always be around too. But they will have to evolve, become more professional and improve standards; and when that happens, we will applaud.

But back to first-time buyers

We at London Money have never lost sight of how it felt to buy our first home. I still recall my one-bedroom flat in Hanwell, which I would lovingly decorate in the evenings (magnolia; it was the mid-90s after all). I would finish at 10pm with a well-earned beer, sitting as I did on my collapsible garden chair to stare at the space where my TV would one day be. But none of that bothered me, because after renting year after year across London, I now found myself actually owning a property.

To this day it remains one of the best feelings I’ve ever had, and so I want others to know what that’s like. That’s why we will always endeavour to put first-time buyers at the forefront of what we do. We will do whatever we can to help you get there, and to start you off we’ve produced a free guide: ‘Everything you need to know about buying your first home’. Download it here.

Martin Stewart is an independent mortgage adviser and director of London Money.

Match meI’d like to speak to a mortgage adviser

About the author
Nick Green is a financial journalist writing for Unbiased.co.uk, the site that has helped over 10 million people find financial, business and legal advice. Nick has been writing professionally on money and business topics for over 15 years, and has previously written for leading accountancy firms PKF and BDO.