First time buyer affordability - how can brokers help? 

With the cost of living and house prices both on the rise, the prospect of purchasing a first property is a more daunting idea for many first time buyers (FTBs) than ever before. Not only must they save for larger deposits, but they must tackle many additional costs they might not be aware of from the outset.

Research released by Coventry for Intermediaries in conjunction with the Centre of Economics and Business Research (Cebr) shows that the FTB economy is due to hit £73.1bn by 2024. As part of that figure, many of those looking to purchase will contribute over £10,000 each to the economy thanks to additional costs such as renovations, furniture, legal fees and moving costs. Many FTBs are unaware or underestimate many of these costs providing the perfect opportunity for brokers to demonstrate their value whilst fostering working relationships for the future.

Furthermore, with the full stamp duty holiday now over, and house prices continuing to rise above the £300,000 threshold for FTBs, more people hoping to step onto the ladder are facing these extra tax costs. In fact, a recent survey found that one in four FTBs are now paying stamp duty, up from one in six in 2020[1].

Aside from governmental reform it is hard to dramatically alter, remove or reduce this tax burden. However, brokers can step up to provide support to FTBs, helping inform and educate on the cost of other bills.

With access to a broad range of products, brokers have a key role to play in helping FTBs find the best product and rate for them, especially whilst products are regularly chopping and changing as a result of wider economic factors. Similarly, brokers can also advise on green products which can help borrowers save on renovation costs when they buy. For instance, many lenders offer green incentives and subsidies to encourage borrowers to improve energy efficiency in their homes.

Some costs cannot be avoided, but brokers can help clients anticipate these costs, enabling them to plan ahead and avoid any nasty surprises. This support is not overlooked by FTBs, as 74% of our respondents said broker advice was important in their experience, highlighting both the opportunity and responsibility brokers have when supporting FTBs.

By providing guidance and expert advice for FTBs, brokers not only help new borrowers onto the housing ladder and improve their own business portfolio, but they also ensure first time buyers continue to contribute to the UK economy.

Through supporting FTBs throughout their home ownership journey, brokers demonstrate their value to new borrowers, laying the foundations for a strong business pipeline as FTBs, their friends and family members, continue to seek mortgage advice for future purchases. Helping to educate clients, delivering high quality service and sourcing affordable mortgage products will help brokers foster life-long relationships for years to come.

Read our latest First Time Buyer Economy report.

[1] HomeOwners Alliance stamp duty research June 2022