YBS says housing market is becoming “elite-only”

The dream of homeownership, once within reach for many, has slipped further from the grasp of average Britons. Recent findings from Yorkshire Building Society depict a challenging landscape in the UK housing market, where homeownership appears to be drifting away from the average person’s reach. The survey conducted by the 159-year-old British Mutual reveals a disheartening perception among a significant majority—78% of first-time buyers and 73% of remortgagers—that homeownership is becoming an exclusive privilege. This growing sentiment highlights the need to address disparities and inequities within the housing market.

Perhaps even more alarming is the belief held by 61% of first-time buyers and 54% of landlords that the UK is heading towards a future where it becomes a nation dominated by renters within five years. Such a transformation could fundamentally reshape the nation’s social fabric and underscores the urgent need to correct the housing imbalance.

Landlords also feel they are getting a raw deal. 61% believe the rental sector is becoming less attractive, while 58% feel that the government’s policies are pushing them out of the market. This raises concerns about the potential loss of housing options for those dependent on rental properties, which we will seemingly rely on more in the coming years.
The challenges faced by aspiring homeowners are multifaceted, including historically high house prices and the economic volatility of the cost-of-living crisis, which collectively make traditional homeownership increasingly elusive.

In response to these challenges, energy efficiency has taken on greater significance for borrowers, with the government incentivising eco-friendly choices. However, this further accentuates the gap between those able to embrace “green” homeownership and those struggling to do so.

First-time buyers now dream of larger properties with outdoor spaces, reflecting changing working patterns. However, the harsh reality is that many end up compromising by seeking smaller homes in less affluent areas, turning their dreams into a “shrinking” reality. This economic imbalance often forces individuals to extend mortgage terms, push mortgage repayments into retirement, or seek financial support from family members to make homeownership attainable.

Buy-to-let landlords, once seen as an essential part of the housing ecosystem, are facing an increasingly “taxing” plight. Tax changes and rising interest rates are slicing their profit margins. The reason this should worry us is that without “profit”, more and more landlords will leave the sector, risking the availability of rental properties for vulnerable groups.
Statistics challenge common misconceptions about landlords, revealing that only half have increased rents in the last 12 months, with their average increase (10%) falling below peak inflation rates. These facts suggest that rent controls may not be necessary and could, in fact, push landlords out of the sector.

The research highlights a broken mortgage and housing market in need of a root-and-branch overhaul. Regulation and innovation have not kept pace with changes in society and lifestyles, and, as a result, have we sleepwalked back into a scenario reminiscent of the 19th-century divide between the ‘haves’ and ‘have-nots’?

Having originated as a mutual within the movement that transformed the landscape 159 years ago, when a dentist, a shoemaker, and a plumber joined forces to create the Huddersfield Equitable Permanent Benefit Building Society, the mutual recognises the need for significant change today. However, the challenge extends beyond any single organisation’s capacity. What is needed is a concerted industry effort involving lenders, regulators, government, and non-political stakeholders to find a strategic and lasting solution to the two core problems: there is not enough variety of housing stock to rent or buy to meet the evolving needs of today’s population, and what there is, is becoming unaffordable for many.

SUGGESTED QUESTIONS

· Tell us about the research
· How have we reached the current state of the housing market, where these challenges are the norm?
· Does the housing market picture differ in various parts of the UK?
· What advice can you offer to aspiring homeowners navigating the current market?
· How are new tax changes for Buy-to-let landlords risking the availability of rental properties?
· What initiatives are YBS introducing to make homeownership more accessible to first-time buyers facing these challenges?
· Where can we go for more information?

Ben Merritt: Director of Mortgages, Yorkshire Building Society

Ben Merritt, currently the Director of Mortgages at Yorkshire Building Society, has consistently proven himself as a leading voice in the mortgage sector over his 13-year tenure with the institution. With a solid background in financial services, Merritt’s experience spans across various facets of the mortgage landscape.

His achievements are notable; he has successfully executed multi-£billion growth plans, meticulously managed P&L objectives, and delivered tailored brand, customer, and broker propositions to harness market opportunities. His contributions extend to the board level where he has been responsible for the design and delivery of product strategies. Merritt’s leadership style emphasizes creating a culture of empowerment within his product teams, underlining his commitment to fostering expertise and growth within the organisation.

Merritt’s in-depth knowledge encompasses product pricing, balance sheet optimisation, and the intricacies of P&L delivery. His strong interpersonal skills coupled with his ability to influence and engage stakeholders showcases his holistic approach to leadership. With a firm foundation in strategy, planning, and project execution, Merritt remains a significant figure in shaping the trajectory of mortgage solutions in Leeds and beyond.