Comments from:

Lucy Lewis

Senior national accounts

and first-time buyer lead,

Skipton Building Society

Too many people in Great Britain are struggling to afford their own home — and that especially includes first-time buyers (FTBs).

The challenges have been well documented with lack of supply, the cost-of-living crisis, high interest rates and difficulties saving for ever-increasing deposits all playing their part. As brokers, you’ll know better than most the impact this is having on people’s daily lives.

At Skipton Building Society we believe everyone should have somewhere to call a home. For the last 172 years, we’ve made it a priority — from offering mortgages, to supporting people in saving to buy a home. And in 2024 we helped more than 20,000 people — the most ever — into first homes.

"Six of the 10 least affordable areas are in Wales"

Hopefully you already know us as a lender trying hard to innovate in the market, especially when it comes to FTBs. Our Track Record product and Income Booster proposition, our FTB product range and our ability to lend on new-build houses and flats up to 95% LTV (or higher including no deposit at all if using Track Record) are all testament to that.

Shared goals

The Skipton Group is led by Skipton Building Society and is made up of different organisations with shared goals. The Group brings together a valuable range of research and data.

And now, you can access some of that information too. The unique Skipton Group Home Affordability Index highlights the challenges facing FTBs, home movers and downsizers. It looks not only at the affordability costs of buying a property but also at the costs of them living in and maintaining that property.

"Once again, the index has laid bare the scale of the challenge facing FTBs"

According to its data, nearly 90% of potential FTBs cannot afford to buy a typical first home in their local area based on their personal financial situation alone (i.e. without help from Bank of Family). Perhaps unsurprisingly, nine of the 10 most affordable areas for FTBs are in Scotland, but more of a surprise is that six of the 10 least affordable areas are in Wales — not London as you might expect.

We also found that:

• Nearly 40% of all potential FTBs find themselves in an unaffordable housing situation.
• That’s because they’re spending more than 45% of their household income on essential housing costs.
• Only 20% of potential FTBs have a large enough deposit for the average FTB home in their area.
• Upcoming stamp-duty land tax reforms will only make it harder for FTBs. From 1st April 2025, the stamp-duty land tax threshold for FTBs in England will change to £300,000.

Skipton Group’s analysis shows the proportion of local authority areas in England where the average FTB home will attract stamp-duty land tax is set to almost quadruple overnight from 8.4% to 32%. By the end of 2027, this is forecast to increase to 42% as house prices continue to grow — making stamp duty a challenge for FTBs across Great Britain, not just those in London and the Southeast.

"By offering insights into affordability in nearby areas, the index helps expand the range of possibilities to consider"

Skipton Group’s Home Affordability Index tool combines data from the Office for National Statistics, the Bank of England and Skipton Group. It gives you granular insight, down to local authority level (that’s 363 local authority areas across Great Britain). We’ve broken the data down to this level as a direct result of broker feedback.

We hope you find the index helpful. Some brokers have shared that it serves as a valuable resource for individuals who may face challenges affording a home in a specific location. By offering insights into affordability in nearby areas, the index helps expand the range of possibilities to consider.

The tool also allows you to explore various factors such as housing types, age groups, income levels, locations, and household compositions, providing a better understanding of how affordability varies under different customers’ situations.

"Nearly 90% of potential FTBs cannot afford to buy a typical first home in their local area"

This is the second iteration of the Skipton Group Home Affordability Index and we’re proud of the granular level of analysis it provides. Once again, the index has laid bare the scale of the challenge facing FTBs whilst providing a useful tool for brokers to interrogate the data in their local area.

Plan of action?

But it’s all very well knowing what the challenges are and how people are affected. What are we going to do about it? Key for me is that lenders continue to innovate to help people face into those challenges and realise their dream of owning their own home. Fortunately, we’ve already seen some great innovations in this area.

Income booster (joint borrower, sole proprietor) schemes are a great way for prospective buyers to improve affordability with a little help from a family member (or friend), low-deposit products, Skipton’s Track Record mortgage, plus several innovative options from our building society friends. These and other initiatives all do their bit to provide solutions for customers with different needs and circumstances. But there’s still more work to do.

"We’ve broken the data down to this level as a direct result of broker feedback"

For Skipton Group, our next big job is to share the findings from our latest Skipton Group Home Affordability Index with the government and policymakers — we are standing ready to inform and contribute to the wider conversations around how we’re really going to start improving access to the housing market for FTBs. 

Source: Lucy Lewis, Mortgage Strategy