The first-time buyer crisis has been one of the major issues of the housing industry and recent events have ensured it is not about to go away. Nor, as a result, will the scapegoating.
One reason the issue has been in the headlines of late is the recent policy announcement by the Conservative Party that a Tory government would scrap stamp duty for first-time home buyers on all homes valued under £250,000. Then there was the YouGov survey, which involved two identical surveys of the public, one in late March and another at the end of September and start of October this year. Its principal finding was that the number of people who identified themselves as first-time buyers was down by 20 per cent during this six-month period.
Commenting on the figures, Louise Cuming, head of UK mortgages as price comparison website moneysupermarket.com said: “First-time buyers are the lifeblood of the housing market and provide essential liquidity, so the fact this segment is getting smaller is worrying for the economy as a whole.”
The most likely reason, she suggested, was that recent economic times had been “fraught with uncertainty”, which had given potential entrants to the housing market “cold feet” about the prospect. No mention here, therefore of the buy-to-let market.
Yet the idea persists in some quarters that by snapping up available homes, buy-to-let investors are denying first-time buyers the chance to get on the ladder.
Nonsense, countered Simon Gordon, head of public affairs at the National Landlords’ Association (NLA). He said: “This is too sweeping a statement. A great many buy to let properties, particularly in London, are not the type of properties that first-time buyers will be buying.”
Mr Gordon cited as an example of this luxury pads in wealthy parts of central London as not exactly the kind of places those taking their first steps onto the ladder would look to buy.
So why does this accusation persist? “What people are doing is they’re treating the UK housing market as one market, but it’s not one market,” Mr Gordon explained.
Of course, he noted, there was another side to property investment, that of speculators buying properties and leaving them empty in the expectation of being able to sell at large profits if prices rise. Such people, Mr Gordon said, the NLA “don’t have any time for”, adding that they “are not landlords”. Speculators, by lowering the overall amount of available stock without reducing the demand, are having a negative effect.
So if what Mr Gordon labelled “buy-to-leave” investors, rather than buy-to-let are indeed at fault, does this mean they are solely to blame and the most convenient scapegoats?
The evidence would suggest that is not entirely the case, for there is also the issue of second homes. Firstrungnow reported last week that one in ten Britons now owns a second home, research by Nationwide has found. Thus those who buy property and leave it empty are not all property speculators. Some just leave homes empty until the weekend.
For areas such as the south-west, a major hotspot for second home buying, this is a significant factor. Homesgofast reported at the weekend that new research from estate agent Knight Frank showed a 24 per cent increase in Cornish property prices over the last year, something which will put plenty of homes out of reach of the average local in what has historically been a low-income county.
Thus with buy-to-leave, second homes and the recent uncertainties about the economy, there may be plenty of reasons beyond buy-to-let to explain the decline of first-time buyers. In this case more house building, new regulations curbing buy-to-leave and tax incentives, whether stamp duty cuts or an alternative measure instigated by the Labour government, may be successful in reviving the first-time buyer market without any curbs on buy-to-let.