Raising a deposit is the most significant barrier for first time buyers, according to a survey by the Building Societies Association (BSA).
As part of a major review called ‘Stepping up to the Mark’, the BSA asked its members what prevents people from buying a home, and what they are doing to assist first time buyers.
Building societies found four main barriers to home buying in the UK: raising deposits, making monthly repayments, stamp duty and legal and valuations costs.
Commenting on the findings, Adrian Coles, director general of the BSA, says: “It is no surprise that with the average house price being almost £220,000 (CLG figures), raising a deposit is such a barrier for first time buyers. Even a 10% deposit necessitates saving over £20,000, a sum out of reach of many potential buyers who have no existing housing equity.“
He says many societies are helping first time buyers by providing 100% mortgages to those who can afford the additional monthly repayments they entail. He says societies also offer a wide range of other options for first time buyers.
However, the BSA says the Government needs to focus on problems with deposits when attempting to help first time buyers.
Coles says: “The existing Government schemes designed to help aspirant first time buyers fail to recognise that it is the deposit that is the problem rather than the monthly mortgage repayment. With rents being so high in many areas, buyers find that their monthly housing costs are often no higher than their previous monthly rental payments.”
Recent research suggests the monthly cost of renting is now almost identical to the cost of buying, meaning many tenants are finding it hard to save a deposit.
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