"The Government no doubt has some very difficult decisions to make; there’s no one-size-fits-all solution to address the issues facing the UK housing market, and it will no doubt require a range of tailored responses from both the government and the industry"
- Brian Byrnes - Moneybox
Ahead of next week's budget, new research has revealed that first-time buyers want greater support from the government to help them achieve their home buying goals this year.
The findings from Moneybox highlighted the concerns of 76% of prospective FTBs who say that the government should do more to support them in securing their first home. The ‘Voice of First-Time Buyers’ research - which surveyed 4,000 aspiring FTBs and 500 recently successful FTBs - also reveals key support measures that FTBs believe would be impactful in addressing the challenges they currently face.
The top measures that aspiring FTBs believe the Government should take to support them, include:
Building more affordable housing and giving FTBs priority (43%)
Reducing council tax for first-time buyers (37%)
Introducing financial incentives for developers to build more affordable homes (29%)
Introducing financial incentives for sellers to prioritise first-time buyers (27%)
Introducing additional charges/fees on second homeowners/buy-to-lets (21%)
FTBs also recognise the vital role the Lifetime ISA will play in helping them purchase their first home. First introduced in 2017, so far, the product has been a crucial savings tool which has helped 227,600 FTBs purchase their first home far sooner than would have previously been possible.
With the LISA allowing FTBs to receive a generous £1,000 government bonus on every £4,000 saved each tax year, the product has already seen £3bn worth of withdrawals made for house purchases as of 2024. With Moneybox observing a 32% year on year increase in the number of new customers opening a Moneybox LISA in the first half of 2024, it's clear the product is more popular than ever.
However, as the product rules have not been updated since its introduction in 2017, FTBs are calling for measures to futureproof the product:
23% have called to increase the LISA property purchase price cap in line with current house price growth
A further 23% have also called to reduce or remove the government's unauthorised withdrawal penalty on LISA
In a further study of 500 Moneybox FTB customers, this call for change was also evidently clear; with 53% calling to increase the LISA property purchase price cap in line with house price growth, and 34% wanting a reduction or removal of the government's unauthorised withdrawal penalty on LISAs.
Brian Byrnes, Head of Personal Finance at Moneybox, says: “In July we saw the Labour Government take the stage with clear promises in its manifesto to better support FTBs and to be a government of wealth creation for the nation. Now, three months on, it’s been a long wait for what will unfold in the first Budget of the new Government, and it's understandable that FTBs are anxious about whether their needs will be addressed.
"And while there has been much speculation around the policy changes that may or may not make it through on the day, FTBs recently received the news that the Chancellor may not be extending the current Stamp Duty relief beyond March 2025.
"At a time when affordability is already a key obstacle for those looking to get onto the property ladder, this will understandably be a major blow for FTBs, but also feels counterintuitive to the new Government’s election promise to build prosperity in the UK.
He adds: “The Government no doubt has some very difficult decisions to make; there’s no one-size-fits-all solution to address the issues facing the UK housing market, and it will no doubt require a range of tailored responses from both the government and the industry. However, we at Moneybox believe there are still some near-term pragmatic measures the Government can introduce to give FTBs some positive news this budget, without incurring significant costs to the public finances.
“One simple, yet effective, measure being; future-proofing the Lifetime ISA. By simply ensuring this fantastic product continues to be fit for purpose for all those who need it most in to the future by updating its rules, we can not only support the ambitions of homeownership for these people but also inject much-needed growth into our economy.
Brian concludes: "This is a vital tool that is helping FTBs save, on average, an additional £3,000 in government bonus towards their house deposit, giving them a much-needed boost when withdrawing to purchase a home. For these reasons, we urge the Chancellor and Treasury to consider the LISA in its plans for fiscal reform and to not forget the role homeownership plays in enabling wealth creation, and supporting our economy.
"Because enabling first-time buyers is not just about helping young people buy a home; it is a cornerstone to nurturing the future wealth creators of our society.”
