Skipton's Jen Lloyd calls for 'real, meaningful action' to address housing affordability issues
This article was created in partnership with Skipton Building Society
Though for some it’s a conscious choice, there are millions of people in the UK who are renting and don’t want to be. These “resentful renters” fall into the well-recognised rental trap where they are able to pay their rent every month for a sustained amount of time, but don’t have the option to be considered for a mortgage.
“We wanted to do something about that disparity,” said Jen Lloyd (pictured), head of mortgage products and proposition, who added Skipton Building Society was formed in 1853 for one purpose: to help people have a home to call their own. And this mission remains as the foundation, and at the forefront, of everything Skipton does, even over a century-and-a-half later.
While things have changed quite a bit since the 1800s, Skipton evolves alongside the needs of those it serves and in alignment with that long-standing purpose, “we looked at different data points, began internal discussions, and created a product to bring to the market to help resentful renters escape the rental trap and get onto the property ladder.”
Skipton’s Track Record Mortgage
Skipton’s Track Record Mortgage product, which launched in May last year, allows people who can prove they’ve been paying their rent consistently for at least a year to borrow 100% of the value of the property they’d like to buy — with the caveat that the mortgage payment can’t be higher than their rent payment, as not to put people under greater financial pressure. Removing the deposit requirement is a huge boost as it means people don’t have to save for a deposit at the same time as paying rent, which is a substantial financial barrier. Applicants are welcome to put down up to a 5% deposit, if they do have savings they’d like to use toward the property.
Lloyd believes Track Record will continue to gain traction in the current market, pointing to elevated rents, which increased 8% year-on-year and show no signs of slowing, and easing mortgage rates, which while unlikely to plummet back to historic lows of the recent past have reduced from the highs seen in 2022/23.
“Given these current dynamics of rent prices contrasted with mortgage payments, the requirements around this product are more and more compelling,” Lloyd predicted. “We’ve done a number of studies that bring into sharp focus the need for something like Track Record.”
Running rental research
Skipton has long been operating with a laser-focus on helping more people into homes, and renters are an increasingly urgent population to think about. The lender partnered with Hamptons (an estate agent within the Skipton Group), to learn more about this demographic, launching an in-depth research project that looked at data such as lettings and rent prices and gathered information from 2,000 renters “about what’s on their minds and any perceived hurdles to getting out of renting and into home ownership,” Lloyd summed up, adding “it’s all about painting a richer picture for us as a lender in terms of solutions we’re bringing to market.”
Some results that stood out to Skipton were that 40% of the people spoken to would consider moving back in with their parents to cut costs and free up the money they need to save to get on to property ladder, but over a fifth said that wasn’t an option for them. Furthermore, 70% said they wouldn’t want to even if it was possible because they felt it would burden their parents. But with UK rent prices climbing — last year the average rent exceeded £1,000 a month for the first time ever, now sitting at £1,200 overall and in London specifically, £2,000 a month — something’s got to give. Keeping an eye on these prolonged trends and challenges are key to Skipton’s approach and aligns with the lender’s overall purpose.
“For us, it’s thinking about what product solutions we have to help those people,” Lloyd said. “People who are renting but don’t have or won’t take the option of moving back home, what do they do?”
Accessing other options
Overall, the message is “don’t assume homeownership is out of reach just because you don’t have a full 5% deposit and it will take you a long time to save it,” Lloyd stressed. She added that while Track Record is a great option for some, prospective buyers caught in the rental cycle should consider all the options out there — there are several good ones.
For example, the government-backed savings account Lifetime ISA. If someone who rents does have the capacity to set some money aside, they can save up to £4,000 a year into product and the government will add a 25% bonus on top of the amount.
“If you’re saving for a deposit, it makes sense to maximise the amount you’re able to put away,” Lloyd said. “It’s worth looking at.”
Another option is Skipton’s Income Booster, also known as Joint Borrower Sole Proprietor. Available from some lenders in certain scenarios, it allows first time buyers to add up to three extra people on to a mortgage, without making them a legal owner of the property. All incomes are factored in during the application, which could give more borrowing power. Skipton renamed this offering to make it more accessible.
A call to real, meaningful action
Despite a lack of meaningful support for first time buyers in the recent Spring Budget, nobody is blind to the fact that the housing affordability crisis needs to be addressed. For systemic challenges, such as lack of supply or houses that stand empty, Lloyd welcomes “real, meaningful action” from the government, but she also encourages fellow lenders to take action now. She urges them to “think differently about the problems at hand and focus on developing real solutions for real would-be buyers.”
Skipton is uniquely well-positioned in this regard because they have the benefit of the group to provide data on things like sale and asking prices, rent trends, and valuations. This comprehensive picture of key metrics delivers insight into the dynamics at play, and “is something we fully intend to continue to capitalize on,” Lloyd said.
“We’ve demonstrated that we’re innovative and that we’re prepared to be bold in the decisions we’re making, and this is a call to action for other lenders to do the same,” she said. “We must think about solutions that work for a housing market that’s changed a huge amount over the last few years. Anything we can do, we will and that includes products like Track Record. I relied on support from my family to get me on to the property ladder, and I’m proud we offer a solution for people who haven’t got that option.”
