Over half of potential buyers in Yorkshire and Humberside are trapped in rented accommodation as they cannot afford to access the property market, with many seeing their purchases fall through due to difficulties with mortgage finance.
58 percent of potential first time buyers are forced to continue renting as they simply cannot afford to get a foot on the property ladder, according to chartered surveyors across the region.
Furthermore, 22 per cent of those who do try and take the plunge are seeing their dreams of home ownership shattered as problems accessing adequate mortgage finance are causing their deals to fall through. The large deposits required by many lenders coupled with steadily increasing rents across much of the country mean that those who cannot rely on the ‘bank of mum and dad’ to raise a deposit are struggling to generate the funds that many banks require.
The government recently introduced its NewBuy scheme which is designed to assist first time buyers by encouraging lenders to offer 95 per cent mortgages. However, as this is only available for newly built properties, the vast majority of homes in the UK remain unaffordable and inaccessible for many.
RICS would like the government to consider a similar scheme for second hand properties, lending or guaranteeing first time buyers a reasonable deposit in return for a stake in the home. This would provide the government and the taxpayer with a clear return on investment, allow first time buyers to access the market and free up stagnant chains. Whilst there are a number of schemes being considered by local authorities and private funders, this is fragmented at present and lacks the volume to significantly improve the number of buyers needed to stimulate market activity.
RICS Yorkshire and Humber spokesperson, Jon Charters-Reid of Charters-Reid & Associates Ltd says: “The fact that lenders are requiring such hefty deposits now is disheartening for many. However, in some parts of the region, we are starting to see some great deals on offer for first time buyers, including 95% mortgage deals. Such incentives need to continue and be rolled out across the whole of Yorkshire and Humberside if we are to avoid transaction levels stagnating.”
Peter Bolton King, RICS Global Residential Director, adds: “RICS would like the government to consider a mortgage indemnity scheme that works for the whole market, not just new build. NewBuy could potentially lead to market distortion by reducing demand for second hand property. Without allowing first time buyers greater access to the second hand market, chains and transaction levels will continue to stagnate.”