More new homes needed for downsizers and first-time buyers

Simon Wright, Partner, Carter Jonas, Leeds,

More help needed for first-time buyers, second-steppers and downsizers
More help needed for first-time buyers, second-steppers and downsizers

When the Chancellor, Philip Hammond, unveiled his first Spring Statement, the property industry held its breath. Housing is often at the top of his economic agenda, and is a talking point for the broader market, and, of course for us, closer to home.

Indeed, Hammond started with some good news, particularly for those at the start of their property career, for it was announced that 60,000 first-time buyers have so far benefited from Stamp Duty Land Tax (SDLT) relief, which was announced back in the autumn of 2017. In many instances, this proved to be a weight off the ‘bank of mum and dad’, too.

Having said that, we do feel that much still needs to be done to help the first-time buyers around Leeds, York and Harrogate, where they live in a distinct concentration. I have witnessed first hand the benefits that government-led initiatives such as Help to Buy afford, and while the intention is positive, it is at present inadequate. Much seems to be done to up the supply of luxury new-build, but ultimately the delivery of new, one and two-bedroom entry level properties, whether apartments or houses, needs to be increased significantly.

As it stands, the volume of homes eligible for Help to Buy is so restricted that those who have no other choice but to use the scheme are having to move quite a distance from where they grew up, and where they want to live, in order to take that first step onto the property ladder. It raises the question of whether the compromise is justified. Buying a home isn’t just about bricks and mortar, it’s about cultivating a way of life, ideally with friends and family close by.

It is critical that first-time buyers are helped into the market because they don’t exist in isolation; they help to motivate the sales market and activity at the entry level inevitably reverberates up the ladder.

At the same time, we feel that second and third-steppers should be offered greater support – many of whom are desperate to graduate out of their starter home and into a grown-up property. They constitute the increasingly squeezed middle class, and we hope that a proportion of the much-needed new homes that Hammond continues to pledge will be adequately sized and ringfenced in price for these forgotten homeowners looking to secure enough space in which to bring up a family, without jeopardising their financial stability.

Going forward, we would like to see more done to alleviate the pressure of Stamp Duty at the top end of the market. At present, the pressure of Stamp Duty is at risk of precluding many middle-earners from moving up the ladder, whereas, more needs to be done to alleviate the exorbitant costs of buying a property to restore market balance. Buyers are resourceful, and we’ve heard from our colleagues in London that some are negotiating on a property’s asking price to accommodate Stamp Duty costs.

Finally, the Chancellor has missed a trick in failing to incentivise empty-nesters and prospective downsizers, many of whom retain the four and five-bedroom homes that they bought forty or fifty years ago, but which now house a number of spare rooms. We can’t possibly expect them to vacate their lifelong homes if they don’t have somewhere viable to move to. There is stiff competition for high-end new build apartments in Harrogate and York.

Ultimately, while the supply of new homes needs to be upped, we also need to better allocate the homes already in existence, allowing the next generation of families to enjoy a forever home. It is critical that we build the properties that our residents need – not that serve the agenda of developers.