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Higher rents mean first time buyers compromise on size - claim

Escalating rents have led many first time buyers to adjust their property expectations and accept smaller homes when they purchase, a building society claims. 

Charlotte Harrison, chief executive of home financing at Skipton Building Society, says: “Due to the significant changes in the market this year and escalating rents, we’ve seen many first-time buyers become more realistic than optimistic with what they can afford and adjust property expectations.”

The society says seven in 10 first time buyers are willing to compromise in order to get on the property ladder – with the size of the garden, location and number of bedrooms among the first things to be sacrificed.


A poll of 1,000 adults who plan to buy their first home within the next three years found of these 42 per cent are happy to have a smaller garden if it means they can buy a home. While 37 per cent are happy to be further away from where they initially wanted to be.

According to internal data from the Skipton Group - which includes Skipton Building Society and Hamptons Estate Agents - first time buyers made up more than a quarter of the housing market in 2023.

Now at 28 per cent, this has still grown by five per cent since 2020, despite a period consisting of a pandemic, economic downturn and tough market conditions.

Aneisha Beveridge, Head of Research at Hamptons, says: “First-time buyers who have been able to successfully navigate 2023’s higher interest rates have increasingly found themselves at the front of the home-hunting queue. With nothing to sell in what’s been a tough market, those buying their first home are being favoured over offers from anyone with somewhere to sell, often even when their offer is a little lower.

“This means they’re getting more home for their money than they were last year, particularly if they’ve got a healthy deposit. New buyers have been driven into the market by rapidly rising rents which are making the increases in mortgage rates look more palatable.”

“However, with mortgage rates forecast to continue falling, movers will probably return in more meaningful numbers in 2024.”

The research, carried out by OnePoll, found 34 per cent thought they’d first own a semi-detached property, ahead of a flat (25 per cent) and terraced (21 per cent).

It was only those buying in London who assumed they’d more likely buy a flat over semi-detached (38 per cent to 26 per cent).

Figures from Skipton Building Society and Hamptons revealed more first-time buyers are from London and the south of the country this year compared to last, but there have been fewer in the north of England and around Yorkshire in the last 12 months.

There are 28 local authorities where those buying their first property actually outnumbered other movers – with the majority being in the south. Areas in and around London like Brent, Greenwich, North Northamptonshire, Dartford and Bexley saw swathes of new buyers, compared to more experienced movers.

Those in London were far more likely to receive financial support towards their deposit from their parents or guardians than other regions – 46 per cent compared to the national average of 35 per cent. While more northern cities like Leicester and Leeds also had a majority of buyers getting on to the property ladder for the first time.

But there seems to be an increased buying power of these younger house hunters – the average household income has increased by 14 per cent.

Harrison continues: “With many buyers realising it’s better to step onto the property ladder with a smaller starting point of a property than hanging onto the idea of waiting to own something much bigger, especially if they’re paying escalating rents. That being said, people trapped in renting remains one of the UK’s biggest housing challenges, with increasing rents and the cost-of-living squeeze further impacting people’s ability to save for a house deposit – making it almost impossible for people get onto the property ladder.”

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    Renting the wrong property is inconvenient but easy to rectify.
    Buying the wrong property can be financially catastrophic. FTBs pay minimal fees to buy their first property. Second steppers have to pay estate agents to sell their first home, SDLT on the new property, solicitors fees to sell, more solicitors fees to buy, mortgage fees and come up with more deposit for the bigger house.
    Last time I moved 12 years ago it was a downsize and the fees were £25K. One of my former tenants is looking at selling his FTB flat and buying a bigger house. He needs to come up with £40K to make the move possible. He's paid his mortgage for 3 years since buying the flat. That was roughly the same as rent would have been, so what was the point of buying a property that was obviously going to be too small as soon as the thought of children entered the equation?
    How many of us remember the 1990s when young couples were trapped in small FTB properties with negative equity and saw the chance of parenthood slip away from them? Lives put on hold for 10 years or more simply because they fell into the trap of buying a small property in a falling market just to get on the ladder.

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    Is there now anything that cannot be blamed on landlords?


    Global Warming anyone ☔️ ⛈ ⚡️ 😂😂



    It's Landlords' fault that all rental properties aren't EPC A, so we're also to blame for global warming!

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    Higher Rents are by Statute, apart from that we all have to cut the pattern according to our cloth.

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    Surely it's higher interest rates and harsh lending criteria that are the main barrier to buying a property? Higher rents are in theory an incentive to buy rather than rent. I agree higher rents make it more difficult to save up a deposit, but size of deposit is down to lender requirements and affordability calculations.

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    • s M
    • 03 January 2024 17:08 PM

    Most first-time buyers that I speak to are complaining about the massive interest rates and arrangement fees that Building Society's charge. These stop them from buying all together.


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