A third of first-time buyers have given up being self-employed to have a better chance of getting on the property ladder.
Despite Chancellor Philip Hammond talking up the benefits of self-employment, research from Aldermore Bank has found that 68% of self-employed first-time buyers think that getting on the property ladder is difficult and three in five do not know how they will ever manage it.
The lender says that for almost one in three (32%), raising the deposit was the biggest obstacle, while 14% said the biggest hurdle was securing a mortgage.
Another 12% said they had taken a second job to earn extra money to save for a deposit.
When asked what could be done to improve the lot for first-time buyers, the key request among 46% of respondents was to address rising house prices, while 39% suggested an extension of the government’s Help to Buy schemes.
For 37% of those who were self-employed, introducing better mortgage products was seen as key, as well as adapting the criteria for self-employed borrowers.
Charles McDowell, commercial director for Aldermore, which has reduced the number of years of self-employed accounts it asks for from applicants from two to one, said: “First-time buyers are the driving force of the property market but our research reveals just how hard it is for them to get on the ladder, even more so for those who are self-employed.
“Low levels of confidence amongst these groups will have ramifications further up the housing chain so it’s imperative that more is done to support both segments of our society, particularly with levels of self-employment continuing to rise in the UK.
“In the Housing White Paper the Government stated it will focus on delivering the right type of housing in the right places through a new assessment of housing needs, and this is something we fully support to better provide for first-time buyers.”
Aldermore is not the only lender altering its mortgage criteria.
Ipswich Building Society has announced it will consider applications from people on zero-hour contracts.
The lender said in a statement: “Zero hour contracts have become more mainstream over the past few years.
“There are now more than 900,000 people employed on these types of contracts.
“With inconsistent earning patterns and no proof of guaranteed work in the future, getting a mortgage on a zero hour contract could be more difficult – some lenders use an automatic assessment approach which restricts access to those who do not fit the standard application process.
“However, some lenders are realising that for some people on zero hour contracts, affordability isn’t an issue; many have been with the same employer for over two years and a third of people work full time hours.”
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