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First-time buys at 11-year high

THE number of people buying their first home has hit an 11-year high.

More than 365,000 househunters got a foot on the ladder last year, reveal figures released by UK Finance, which represents 300 lenders.

The average first-time buyer is 30 and earns £41,000 a year. ‘Generation Rent’s “wait and see” mentality is gradually becoming a thing of the past,’ said Graham Toy, of the National Association of Commercial Finance Brokers. The number of new home-owners is the highest since 2006 and up 7.4 per cent on 2016.

The increase is likely to have been fuelled by landlords selling smaller properties made unprofitable for them by reforms to rental taxes. The Help To Buy scheme and good mortgage deals probably also played a part, according to industry analysts.

The same figures reveal only 5,300 buy-to-let mortgages were completed in December, down 17.2 per cent on the same month a year earlier. The drop came as generous interest rates offered by banks to landlords began to creep up after the Bank of England increased the base rate in November.

Smaller properties are being ‘freed up’ for first-time buyers as investorsswitch their focus to larger ones with higher returns, said James Cameron, of estate agency Vesper Homes.

He said: ‘When it comes to properties costing less than £350,000 in London, once you take into account taxes, agent fees and mortgages it doesn’t make it economical for landlords to rent them as they just cover the cost.

‘Landlords are, therefore, selling up so they can invest outside of London or trade up to a larger property.’

First-time buyers have been helped by an increase in the number of mortgage deals that require them to pay only a five or ten per cent deposit.

They are also exempt from paying stamp duty on homes worth up to £300,000 — but experts said it was too early to assess the impact of the policy announced in the November Budget.

The increase in the number of new home-owners came despite continuing house price inflation. The cost of the average property rose by 5.2 per cent during the course of last year to reach £227,000 in December, the Office for National Statistics said yesterday.

Fears that Brexit jitters would cause a downturn have not been realised but growth is expected to be modest in 2018. Only 30,800 first-time mortgages were approved in December, down 5.2 per cent year-on-year.

UK Finance’s Paul Smee said: ‘2017 saw the number of first-time buyers reach its highest level in a decade but there is no room for complacency.

‘The weaker December figures are consistent with our market forecast of subdued growth this year.’