Over the past decade, the housing sector has seen no shortage of pledges and policy announcements from successive governments. However, Andy Burnham’s first act in office – a pledge to end rough sleeping, followed by a promise of the largest council housebuilding programme since the post-war period – has placed housing at the centre of the political agenda.
The response from the housing industry has been mixed, while brokers have been broadly supportive of the government’s ambitions. Their focus, however, has quickly moved from the headline announcements to what those commitments will mean in practice for aspiring homeowners.
Certainty matters as much as change
Stamp duty is not changing in this Budget, and the longer-term work on property taxation carries no published timetable. This means that, in the short term, very little is different.
Uncertainty has an effect of its own on borrower behaviour. Customers considering a move may decide to wait if there is a possibility that property taxation could change, particularly when there is no indication of when those changes might be introduced. Brokers will be familiar with those conversations.
For many customers, waiting can carry its own risks. The timing of two years of accounts may have a greater impact on borrowing capacity for a self-employed applicant than any future adjustment to transaction taxes, while borrowers rebuilding their credit profile may reach a point where they are in a stronger position to secure borrowing. These are factors that borrowers prepare for with the support of an adviser, unlike policy decisions where the timeline remains unclear.
What is delivered will matter as much as how much
The Government’s housebuilding commitment is substantial, and the scale of ambition is not in question. Less clear at this stage is how that programme will be divided between homes for purchase, including shared ownership and other affordable routes, and social rented housing delivered through housing associations.
Both are needed, and both address genuine shortages. They serve different customers, though, and for brokers with a first-time buyer or shared ownership caseload, the composition of the programme will say considerably more about pipeline over the next two to three years than the overall total.
The first-time buyer has changed more than the policy has
A lot of housing policy continues to be designed around a first-time buyer who is young, in salaried employment and constrained principally by deposit. That profile describes a shrinking proportion of the customers coming to market and is no longer the normal first-time buyer profile.
First-time buyers are older than in previous generations, and for many, the deposit is the part they have already solved. The greater challenge is how their income is structured. Around 4.6 million people in the UK now work for themselves, and self-employed income is rarely as straightforward as a salaried income when being assessed for affordability. The same is true for contractors, customers with multiple sources of earnings and those relying on bonus or commission payments.
Credit history plays a part too. Our broker partners are also concerned about the limited awareness among first-time buyers that readily available credit, such as Buy Now Pay Later or car finance, can affect their borrowing potential later on.
This is the reality that any successor to Help to Buy, and any future support scheme, will meet. Support designed principally around deposit size will reach fewer of these customers than the headline numbers imply.
The role of brokers and specialist lenders
Whatever emerges from the Budget, the customers most affected will be those whose circumstances do not fit a standard template, and they are precisely the customers who benefit most from advice.
Helping borrowers whose circumstances fall outside a standard template navigate the market starts with recognising where a case may require a more considered assessment and having honest conversations about the options available. Access to underwriting expertise, clear communication and consistency in decision-making remain just as important in ensuring customers with more complex circumstances are able to secure the support they need.
Looking ahead
Housing policy will continue to develop over the coming months, and much of the detail that matters most is still to be settled. Buyers, however, cannot always afford to wait for complete certainty, particularly when their ability to borrow may be influenced by factors such as income structure, credit history or changing personal circumstances. The most valuable support will continue to come from advisers who understand those circumstances and lenders willing to consider the full picture when assessing a case.
Emily Hollands is group head of intermediary sales and distribution at Precise
