04 Mar 2024

Nationwide Urges Government To Boost Homeownership Ahead of Spring Budget

  • Asks include a market-wide review, reintroduction of Help to Buy ISA, stamp duty reform and an increase in higher loan to income lending

Nationwide is calling on the government to provide more support for first-time buyers in the Budget as homeownership continues to be a major challenge for many1.

As part of Nationwide’s plan to deliver fairer banking, the building society has identified four critical measures the government and policymakers should introduce to enable more people to buy a home of their own. 

The asks come as high house prices continue to prevent many from accessing a mortgage, with the two main hurdles being the raising of a deposit and affordability. According to Nationwide’s House Price Index,2 someone raising a 20 per cent deposit on a typical first-time buyer home would require c.105 per cent of the average annual gross income, around £42,2663. While affordability impacts everyone, there remains considerable variation in affordability across the country, with pressures particularly acute in London, the south of England and East Anglia, while Scotland and the North continue to be the most affordable regions.

This has led to stark differences emerging between those who would like to buy and those who are actually able to do so. 

Nationwide is asking the government to include the following four measures to support first-time buyers in the Spring Budget on 6 March:

  • Commission an independent review of the first-time buyer market: a government-commissioned, independently-chaired review of the first-time buyer market will identify the significant challenges facing the sector. It must address the gap between income growth and house-price growth, inadequate supply, the need for planning reforms and the impact of regulations on mortgage lending. A review would help the government produce a sustainable long-term strategy to support people hoping to purchase a property.
  • Stamp duty reform: stamp duty discourages people from moving. This has a negative impact on the economy with the UK losing out of all the spending associated with a house move as well as inefficient use of housing stock preventing home moves to support people’s needs and changing circumstances. Stamp duty reform should remove any deterrent people currently experience when deciding to buy a home or move.
  • Reintroduce the Help to Buy ISA: given the success of the previous Help to Buy ISA, Nationwide wants the government to reintroduce it and increase the amount that can be saved per month from £200 to £500, reflective of higher house prices today and opening up more options for first-time buyers. It would also like to see a proportionate increase in the redeemable bonus to match the rise in house prices. To date, Nationwide has opened over 542,000 Help to Buy ISAs.
  • Enable more lending at high loan to income levels: Nationwide’s Helping Hand proposition, launched in 2021, has successfully tackled the affordability challenge by enabling first-time buyers to borrow up to 5.5 times their salary on five and 10-year fixed rate mortgages to a maximum of 95% Loan-to-Value. However, current regulations mean mortgage lending at more than 4.5 times a borrowers’ income is restricted to 15 per cent of a mortgage provider’s total lending. Increasing this cap will enable Nationwide to support even more first-time buyers, particularly those who may already be paying more in rent each month than their mortgage payments would be.

Henry Jordan, Nationwide’s Director of Home, said: ‘‘The government must make homeownership accessible for more people. By starting with a cross-party review of the first-time buyer market and working cohesively with the industry to implement the best solutions, we can respond to today’s first-time buyer challenges. Nationwide is playing its part through our Helping Hand mortgage and could do more if the cap on high loan to income lending was raised.  To help the process, Nationwide has joined forces with the Building Societies Association and four of the UK’s largest building societies to produce a Housing white paper this spring outlining the solutions we believe are needed to tackle the homeownership crisis.”

Notes to editors

1 English Housing Survey 2021 to 2022: private rented sector - GOV.UK (www.gov.uk)

2The Nationwide House Price Index, January 2024 

3 As at Q4 2023, source: ONS / Nationwide calculations