'No silver bullet' but Skipton’s Paul Fenn urges collaboration to aid important market sector
This article was produced in partnership with Skipton Building Society.
It seems that Skipton’s head of business development Paul Fenn (pictured) can’t turn around these days without hearing a view, opinion, statistic, or idea on how the industry can better serve the first-time buyer (FTB) sector — and for good reason, he noted.
“The FTB conversation seems much more prevalent this year than it has been in a long time,” he explained. “Why? In my view it’s simple: if people can’t buy their first home, nobody can move onto their next home or the home after that. FTBs are essential for a healthy home-buying cycle.”
By the numbers
The average price of a UK property stands at £290,000, a steep increase of 123% from 2003 when it sat around £130,000. Combine that uptick with mortgage rates surging from historic lows and a growing imbalance between house prices and wages — the latter rose by only 95% over the same period — and the affordability “gap” looks more like a chasm.
In 2024, the number of FTBs securing homes annually dropped to approximately 300,000 —half the peak number of 600,000 from recent years — reflecting that compounding financial obstacles place this group at further disadvantage. Many FTBs were priced out by the typical deposit requirement, which averaged £60,000 across the UK, ranging from £27,000 in the North East to £144,000 in London. This affordability crisis means only 1 in 8 can afford a home in their area, while nearly 80% of prospective buyers lacked sufficient savings for a deposit.
“Buying your first property was always challenge, but it’s amplified now,” Fenn noted, adding that product innovation and criteria changes aimed at easing the well-acknowledged challenges are “very welcome because without them we’re all in trouble in terms of the market and our business models.”
Government schemes, regulatory changes not enough
The government has made an effort to address affordability challenges via a number of schemes such as New Homes (England), Help to Buy ISA, Help to Buy Mortgage Guarantee Scheme, Help to Buy (Wales), Right to Buy, and variations of Shared Ownership.
While these are valuable for FTBs who fit the criteria or where a particular solution supports their circumstances, therefore undoubtedly allowing some people to buy property they otherwise would not have been able to, the schemes are not available to the greater population of FTBs. In Fenn’s view, the onus is on lenders to effect real change.
“The mirror should be held up by lenders to lenders to say, we’re the sector of the industry that enables FTBs to purchase their first home,” he said, noting that Skipton has taken the initiative and developed Track Record, for example.
An up to 100% LTV product contingent on the borrower having paid rent and bills on time for a specific period, it’s not static: Skipton amended it this year following broker feedback. The lender also redesigned Income Booster (JBSP) to allow for families and friends to support FTBs and its Lifetime ISA — an option Fenn stresses should be better promoted within the industry given its government matching component — remains a highly valuable savings product for down payments.
In July, Skipton Group launched the Home Affordability Index, a tool and data set which analyses both the affordability of buying a property and the cost of running it. The objective is to get a better understanding of the full scale of the affordability challenges facing both renters and FTBs, and along with Skipton’s other offerings, stands as an example of the “outside the box” approach the industry needs more of.
“This is the challenge for lenders,” Fenn continued. “We must innovate over and above the schemes available to ‘some’ buyers.”
Education and guidance critical
As a “very much broker-led lender,” Skipton dedicates a great deal of time speaking with — and more importantly, listening to — brokers and distributors. Its team of field and telephone BDMs work with brokers daily to understand what the markets need and where Skipton can do better, and the lender also puts on its “Skipton Listens” events.
Designed for brokers to share feedback about what works, what doesn’t, what customers are asking for, and where innovation could help more, “these sessions have been instrumental in helping us re-design products and criteria, and in fact most changes are brought about through this sort of collaboration with industry advisers,” Fenn said.
The lender also runs a Skipton Talks program where guests engage in market chats and share insights, in line with the lender’s belief that industry-wide education and guidance are critical. Brokers’ role as highly skilled and knowledgeable advisers is especially crucial for FTBs, and Fenn stresses the importance of finding routes to get knowledge to FTBs well before they start to look for a property. His plea is for brokers to continue working with lenders to improve solutions for this important group.
“We need industry collaboration: we want to get brokers’ expertise into the communities in which they operate, sooner.”
Skipton’s evolution continues
The challenges for FTBs aren’t going away any time soon and while the onus is on government policymakers, lenders and brokers are well-positioned to lead the way. Heading into 2025, Fenn calls on these groups to work together with trade bodies and regulators to address the problems new homeowners face.
The goal is to make it as easy as possible for FTBs. That involves looking ahead and determining how best to help, Fenn explains. For example, affordability constraints are expected to continue, especially with the reduction of the stamp duty tax threshold which disproportionately impacts FTBs in London and the South. For Skipton’s part, the evolution — and innovation — continues.
“We’re constantly looking at our data across Skipton Group and the wider market to inform how we shape our proposition and how we play our part in finding the solutions FTBs need — but there’s no silver bullet,” Fenn said. “It’s on us to share knowledge, to demystify, and help this group get a foot on the property ladder. Because without the FTB sector, our industry simply can’t continue to exist in the medium- to long-term. It’s impossible.”
