The muted resurgence in first-time buyers from 2013 to 2022, despite good affordability, may be attributed to post-financial crisis regulations. These include higher capital requirements on high loan-to-value (LTV) lending and Financial Policy Committee (FPC) rules limiting lending at or above 4.5 times income to 15% of a lender’s advances if they lend more than £100 million annually.
Since interest rates began rising, first-time buyer numbers have sharply declined, from 405,000 in 2021 to 257,000 last year.
The report also indicates that buying is now more expensive than renting in all UK regions except the North West, Scotland, and Northern Ireland. This contrasts sharply with IMLA’s previous analysis from September 2021, which found it was cheaper to buy in all regions. Despite significant rent increases — 22% nationally and 24% in London between September 2021 and April 2024 — the cost of buying has risen even more.
An earlier IMLA report on the intergenerational divide in housing suggested that even without house price growth over the next 30 years, a buyer with a 25-year 95% LTV mortgage could be £352,000 better off than a renter. Mortgage rates would need to exceed 11.5% for renting to become financially advantageous compared to buying.
“Homeownership brings a range of invaluable benefits to individuals and their families, not just in terms of the accumulated wealth it confers but the peace of mind afforded by security of tenure,” said Kate Davies (pictured), executive director of IMLA. “It can also benefit wider society, helping to build settled communities.
