Do we already have the tools available to boost first-time buyer numbers?

    Marie Grundy - Managing Director of Residential Mortgages and Second Charges

Getting on the housing ladder is hard. It always has been, barring a few years in the run-up to the financial crisis when credit conditions were laxer than they are today.

However, it's always been said that if you save hard enough, and you're willing to make some sacrifices here and there, you'll be able to buy a home eventually. 

But the reality is that the dream of homeownership is becoming less attainable for many people, particularly those living in expensive areas such as London and the South East.

There are two main reasons for this. Firstly, house prices have soared over the past few decades. If you go back 30 years, the average house cost three times the average salary, according to Nationwide. Today it's six.

Not only have UK homes become more expensive, but first-time buyers (FTBs) also find that their incomes do not stretch anywhere near as far as they did a couple of years ago due to rampant inflation. Throw in the fastest escalation in interest rates in a generation and it means the odds are stacked against FTBs.

In fact, data from Yorkshire Building Society suggests there were 21% fewer FTBs in 2023 than in 2022 - the lowest number since 2013. However, FTBs accounted for 54% of all purchase activity, which is a positive.

But why? According to the Building Society Association's (BSA) monthly Property Tracker survey, the affordability of monthly repayments has been the biggest barrier to entry since last summer. 

However, the affordability crisis we are currently experiencing could be less of an issue if inflation comes back down to target and interest rates fall, which may even happen this year. 

Once that happens, raising a deposit will go back to being the barrier facing would-be FTBs, as it has been pretty much since the financial crisis, according to the BSA.

Recent press reports suggest that politicians are even considering allowing lenders to offer 99% LTV deals. 

But the issue is not a lack of products; there are plenty of options at 90% and 95% LTV available on the market. 

Reducing deposit requirements further would be reckless and would just heat up the market, making it even more difficult for BTBs to get on the housing ladder. 

Therefore, the obvious question is do we need new solutions to help people onto the housing ladder or do they already exist?

For me, we already have two highly effective solutions that, given enough backing, could help make the dream of homeownership a reality for thousands more people: shared ownership and right-to-buy.

While critics point to shared ownership's flaws - it can be quite restrictive and you're effectively still a partial tenant - it makes ownership accessible for families who would otherwise struggle to get on the property ladder. 

The same can be said about right-to-buy, which allows council tenants to buy their homes at a significant discount to market rates. 

Right-to-buy was one of the flagship policies of Margaret Thacher's administration in the early 1980s. To date, more than 2 million tenants have bought their own home through the scheme. 

Some commentators blame right-to-buy for fueling the housing crisis facing FTBs today, but there is inherently nothing wrong with the scheme itself. The issue is that successive governments have failed to replenish the housing stock that had been sold off under the scheme. 

Both the Conservatives and Labour have pledged to build new homes in a bid to win over voters as we head towards the election. Labour has also pledged to building more social housing, which would be welcome. 

But very little has been said about shared ownership and right-to-buy, which is disappointing. I would like to see MPs and the wider industry give both schemes a concerted push, alongside reform of the planning system and a drive to build more affordable homes/ 

If we could achieve all three, we would make it far easier for prospective FTBs to purchase their first homes.

Rather than wasting time, money and energy dreaming up 'innovative' new ways of expanding homeownership, maybe more focus should be placed on making the schemes we have available work better.