Buyers delay property purchases by 18 months – warning 

One of the UK’s largest building societies is urging the government to provide more homebuying support as research warns of a drastic drop in buyer demand.

Leeds Building Society is calling for a greater awareness of Shared Ownership and said tenants should get first refusal on homes landlords are selling amid an exodus from the buy-to-let market.

It comes as research by the lender found 60% of potential purchasers are now delaying their plans by an average of 18 months due to the cost of living crunch.

A survey of thousands of UK adults, conducted in late October, found those looking to buy in the next five years have decided to delay their purchase because of either rising inflation, higher mortgages rates or the prospect of falling house prices.

Of those that have decided to delay their purchase, 89% said it will be for six months or more – and the average expected delay in buying is 18 months.

The survey showed the impact that the current economic environment is having on first-time buyers and the housing market more broadly, with  81% of first-time buyers saying that it has become hard to save for a deposit because of increases in the day-to-day cost of living. 

A third said they have been forced to cut back on the amount they can save towards a deposit and 10% have had to stop saving altogether.

Two thirds of first-time buyers reported that they are worried whether they will still qualify for a mortgage as affordability becomes an issue – and almost three quarters are worried about the availability of mortgage deals.

Another 68% of first-time buyers are now worried that – even if they were able to get the deposit together – they would now struggle to meet the higher mortgage repayments.

Overall, one in five first-time buyers said that they’d had a mortgage offer withdrawn and cannot get another, while half fear that they now might never be able to buy a property.
 

To help buyers, and the property market, Leeds Building Society has proposed that the Lifetime ISA mortgage deposit saving scheme should be repackaged, with the limit on house purchases uprated in line with house price inflation.

If a landlord decides to sell their property, the lender suggests, the Government should support tenants to have first refusal on the purchase of the property, while rent payments should count towards someone’s credit history.

Alongside help for first-time buyers, the research said existing homeowners should also have better access to the Support for Mortgage Interest Scheme.

The lender’s report said a stronger case needs to be made for shared ownership to help people onto the property ladder and added that more homes ultimately need to be built.

Richard Fearon, chief executive of Leeds Building Society, said: “The findings from our research are stark but clear: the home ownership dream in the UK is in crisis. Houses have never been less affordable, and the cost-of-living crisis and the recent increases in interest rates are a further blow to those hoping to buy.”