Q1: The Government offer a number of incentives to first time buyers, including Help to Buy and Help To Buy ISAs. What’s your assessment of these, do they go far enough?
The range of Government support for first-time buyers has been welcome, and research shows that over 150,000 first time buyers have been helped onto the housing ladder as a result of Help to Buy.
Equally, the Help to Buy ISA, and more recently the LISA, offer much needed support to people saving for deposits. So, all in all, a good policy response to an important social issue for our times.
Do they go far enough? What is important is how government and industry work together to maximise their impact for the first-time buyer community – across both availability of housing and support to get on the housing ladder.
On availability, the introduction of Help to Buy, and before it FirstBuy, were intended to stimulate more house building. Over the past years we have seen this accelerate ahead, with new build growth at about 7% YoY based on figures towards the end of 2018.
On support, we feel there is more to be done. Whilst there are now more Government schemes which can help first-time buyers, these can sometimes add another layer of complication to the already overwhelming task of getting on the ladder. Buyers need more help navigating the market and this is a role industry must play if we are to maximise the benefit of such schemes.
Q2: And what are your thoughts on the new equity loan scheme being introduced in 2021?
I have mixed thoughts on this. It feels more like a budget cut than a policy change in response to the housing crisis being fixed. However, it does add clarity and allows people to plan – something which is much needed in these uncertain times.
The restriction to first-time buyers feels sensible. Although, given around 85% of Help to Buy was already FTBs, this will not have a major impact. The price caps are more worrying, and with house prices in the North forecast to rise by around 20% over the next 5 years I worry that these price caps will unfairly penalise buyers.
Q3: Other than the obvious financial difficulties, what else do you think first time buyers struggle with when trying to get on the property ladder?
Over the past three months we started a blog series called First Home Stories, where we interview new homeowners and get their perspective fresh from the journey onto the housing ladder. One thing we constantly hear is how the complexity and duration of homebuying makes it stressful.
With the property buying process, many people do not know where to go, who to ask and what to do in certain circumstances.
This is why we created FirstHomeCoach; bringing everything together all in one place makes life easier, personalising a plan makes things relevant and writing guides in plain english empowers buyers to feel more comfortable undertaking the process themselves.
The industry has a big role to play in making life easier. We need to move on from providing basic website home buying guides, to a more personalised, supportive approach where different parts of the industry work together to help the home buyer each step of the way. Quite simply, we need more firms to be on the side of the first-time buyer.
Q4: Do you think we’ll see a rise in first time buyers once the Brexit situation is resolved?
Over recent years we have seen exceptionally strong first-time buyer growth, and for the wider property market to stay healthy we need this to continue. I believe this growth is due to the fact we have a good combination of relative economic stability, more support for buyers and growth in housing supply (particularly new builds).
These conditions provide a decent pathway for people preparing to buy, which in most cases will be a multi-year journey.
Brexit undoubtedly puts something of a spanner in the works because it introduces a degree of uncertainty where there was stability.
People ultimately need to feel like they are able to achieve their life goals. Much of the negative press on millennials preferring avocados to house buying is, I believe, a symptom of goals being pushed too far away rather than a sudden change in human behaviour from one generation to the next. As a society we need to correct this.
Q5: If you could implement one Government policy to help first time buyers more, what would it be and why?
I would increase and expand the provision of savings support for first-time buyers. This is by far the biggest barrier for homeowners and history suggests higher LTV mortgages are not the answer.
It is also an area which you could argue has most intergenerational inequality given the tax incentives for pension savings…but that is a whole other can of worms!
This isn’t just about subsidies either. We have seen proactive government work in areas like Auto-Enrolment, and I would welcome some further impetus to explore how we can combine incentives, innovation and a good understanding of behavioural science to improve policy in this space.
Q6: Tell us a little bit about FirstHomeCoach and what you’re trying to achieve?
FirstHomeCoach is both a response to a lack of cohesive support for the first-time buyer community and a reaction to the opportunity (and threat) that digital technology presents.
When we set out on our journey, despite a number of us being homeowners, we were stunned by the lack of comprehensive support for what many see as one of life’s most stressful events. We are trying to solve this by acting in the interests of the first-time buyer and bringing all they need into one place.
Digital also provides us an opportunity to tailor support, and to make it personal. We live in a world where data is now largely equated with Big Tech trying to sell us products, and we want to reset this.
Our mission is to help people to use their data to help themselves, and we do this by providing a feedback loop where data entered by someone aides their decision making and reduces their administrative burden.
By extension, we wanted to be able to deliver products and services from firms we felt put the first-time buyer’s interests first and make their journey there as smooth as possible. We believe strongly that by working with partners we can achieve more together, and our introducer model is a key part of this.
Q7: And what role does data play in the way you give younger people advice about buying their first home?
Data is key and will grow in importance over the years ahead. Most notably this is because in many cases it can negate the need for advice.
FirstHomeCoach uses data to provide people bespoke guidance. We process your data for you to provide answers based on what you have said and a series of relevant facts (max salary for shared ownership, max age for a LISA etc).
We need to use machines and data to provide people a better frame of reference for decisions: how much can I afford? what savings products are relevant to me? Humans can support this process both emotionally and by explaining things rationally.
Data also offers the wider industry a huge opportunity to cut costs and bring down the price of home ownership, by aiding onboarding and compliance tasks.
Q8: You’re obviously a fan of technology, what’s the best gadget you’ve got in your home?
My robot hoover, which the kids have named Hector. With three kids and a very messy
He can’t do everything but neither does he speak back to us or monitor our conversations. It’s a great example of people and technology living in harmony
Q9: What’s coming next? Are there any exciting developments coming for FirstHomeCoach users?
We have an exciting roadmap ahead with many more features and upgrades planned over the course of the year. We are shortly coming out of beta and working on having the iOS and Android apps available soon.
A lot of the roadmap looks at how we expand the tools available to our users, and better use their data to improve their experience on both our site and with our partners.
Open Banking excites us. We won backing from HM Treasury last year to help develop Rent Recognition (essentially help building your credit score whilst renting) which we see as an important part of the first-time buyer toolkit.
We need to remember, though, that Open Banking is only a year old, and people will take time to trust both how and with whom they share their data; we strive to support this education and ensure that we are ruthlessly transparent to generate the necessary trust from our users.
We are also very open to ideas! Our journey so far has been an iterative one where we have listened to first-time buyers and designed something that meets their needs and addresses their pains.
We are very early in our journey and we won’t have got everything right yet, but by working in partnership with the first-time buyer community we can help more people into more houses more quickly.
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