First-time buyers have said the dream of owning a home is falling even further out of reach after the Chancellor failed to introduce any major new housing policies in Wednesday’s Budget.
Conservative voter Katie Munday, 26, told i she is thinking about voting for a different party following the Budget as she feels like Rishi Sunak’s Government only represents pensioners and families with children.
Ms Munday and her boyfriend, Charl Malan, were hoping to see the announcement of a new policy akin to the Help to Buy: Equity Loan scheme, which is officially coming to an end this month.
However, the Budget was light on housing announcements and did not include any policies directly aimed at first-time buyers.
Ms Munday and Mr Malan currently rent in Bristol and were hoping to buy a house with a 5 per cent deposit, as was allowed under the Help to Buy scheme, which also saw the Government provide first-time buyers with loans of up to 20 per cent of a property’s value.
Without the scheme, the couple are looking at needing to save roughly £30,000 for a deposit.
“We’re trying to save while seeing friends and family. You don’t want to completely give up your social life and not do anything but it’s hard when you’re paying rent,” said Ms Munday, who works in the rail industry.
Mr Malan, who is a civil servant, added: “We’ve never had the opportunity to live with family to save money. We’ve always lived away from home, always paid rent and we both have fairly decent jobs and even we can’t afford it. I don’t know how people cope.”
Sophie-Anne Strong, 29, is also seeing the dream of homeownership slip away without the Help to Buy loan scheme.
She is one of a group of people who are being forced to pull out of the purchase of new build homes under Help to Buy as delays to construction mean the house will not be complete by the Government deadline this month.
The developer of the property has offered a £7,000 incentive for her to purchase the property without Help to Buy, but Ms Strong said it is still unaffordable for her and her partner, who have a two-year-old daughter.
“We spoke to our broker and he said based on our affordability and things like our childcare, we were still short about £40,000, which is what the Help to Buy would have been,” she said.
One of the major policies announced as part of the Budget was the plan to extend free childcare to one- and two-year-olds, however Ms Strong said this will not benefit her, as it doesn’t fully come into force until 2025.
She therefore has no idea when her and her family will be able to afford to own a house.
“[My generation] are essentially having to rely on our grandparents and parents dying and inheritance to be able to buy houses. That’s insane. My family is very working class so that’s not going to happen for me.
“It shouldn’t be this hard just to try and get anywhere. To try and get a house and get a decent paying job and childcare. It shouldn’t be this difficult.”
Chancellor Jeremy Hunt delivered his Budget on Wednesday against the backdrop of a stagnating housing market.
A post-pandemic boom in the housing market ground to a halt last Autumn as rising mortgage interest rates locked many people out of buying property or upsizing.
In the past the Government has used a number of levers to stimulate the housing market and make it easier for first-time buyers to get on the property ladder, including Help to Buy and change to Stamp Duty.
Cuts to Stamp Duty introduced under Liz Truss remain in place until 2025.
David Hollingworth, associate director at mortgage broker L&C, told i it was clear that the Government had no intention of extending the Help to Buy loan scheme but said it was notable that Wednesday’s Budget included “very little mention of getting more houses built”.
“To make housing more affordable, supply is always at the root of that,” he said.
Personal finance expert Myron Jobson, of investing platform interactive investor, told i Wednesday’s budget did not include “any obvious policies that will alleviate the plight of people looking to get on the property ladder”.
However, he said a number of policies in the Budget would have an indirect impact on first time buyers’ ability to afford a home, including the extension of the Energy Price Guarantee and the extension of free childcare to one and two-year-olds.
However, the short term impact of the latter policy will be limited as the free childcare does not come into full force until 2025, Mr Jobson said.
“The Chancellor has focused the Budget on getting the nation back to work rather than alleviating the affordability pressures facing buyers in the housing market. I think he’s just hoping that the housing market will sort itself out,” he added.
He said one piece of “good news” in the Budget was the prediction by the Office for Budget Responsibility that inflation could fall below 4 per cent by the end of this year.
The Bank of England has been steadily increasing its base rate – the interest rate it charges banks – over the past year as part of its efforts to curb inflation, which soared above 11 per cent last October.
This has had an impact on mortgage rates as lenders charge more to reflect the Bank of England’s base rate.
Mr Jobson said people looking to get a mortgage could now “rest easier knowing that this upward trend in interest rates is definitely coming to an end” given the OBR’s inflation forecast.