Helping your customers say ‘Buy' to Generation Rent

The dream of owning your own home. It has been an aspiration that has lived on through generations. In 2023, these aspirations can often feel unattainable for the average UK adult.

Why?

According to Halifax, UK house prices have more than trebled since the start of the 21st century. When considering first-time buyers, they pay prices 264% more than their counterparts at the beginning of the century.

This has meant that renting has become the default position for many young adults looking to move out into their own property. More than half of first-time buyers rent their current home, impacting their ability to save for a deposit. According to Rightmove, the average asking monthly rent outside London is £1,190, with tenants in London paying more than £2,500 for the first time.

Despite these rises, there has been innovation by the government and mortgage market to support first-time buyers.

Help to Buy has been the government’s flagship scheme for turning Hopeful Homeowners aspirations into reality, with over 375,000 taking advantage. With Help to Buy no longer available, it may feel like there is a hefty void to fill.

At Pepper Money, we commissioned our most comprehensive primary research with YouGov to understand prospective and current mortgage customers. As part of this research, we asked first-time buyers what they felt was their biggest barrier to home ownership.

Unsurprisingly, the most significant barrier is saving for a deposit (36%), which Help to Buy supported some customers with. A quarter of Hopeful Homeowners (24%) say their biggest barrier is being able to borrow enough to afford to live in an area they want to live in. 16% say it’s being able to afford the mortgage payments, and 15% say it’s due to a poor credit score.

There are several schemes available to help boost a Hopeful Homeowners affordability, and it’s up to us all to understand each one. Only then can we begin increasing awareness among Hopeful Homeowners.

First Homes

The First Homes scheme offers new build properties for a discount of at least 30% on the open market value. Local authorities can set deeper minimum discounts of either 40% or 50% through local planning policy.

Shared Ownership

Share Ownership enables customers to buy a percentage of a home, with a housing association owning the rest of the property. A first-time buyer pays the mortgage for the share of their property they own whilst renting the remainder from the housing association.

Right to Buy

Right to Buy enables eligible council and housing association tenants the opportunity to buy their home at a discount.

These three schemes are a great starting point for your customers. However, at Pepper we understand that saving for a deposit and navigating around that challenge isn’t the only hurdle to get over.

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