ladder to the skyThe number of first time buyers jumping onto the property ladder has hit levels not seen since the peak of the last property boom.

The latest figures from the Council of Mortgage Lenders (CML), show that the number of mortgages offered to first time buyers is up by 33% on the same time last year, whilst total lending to first timers is up a massive 48% on this time 12 months ago.

The number of first time buyers entering the housing market has been buoyed in 2013 by the Government’s Help to Buy scheme. However, the scheme has many critics, who point to the fact that whilst it makes mortgages more accessible to first timers, nothing is being done to address the lack of affordable housing.

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There is also nervousness that the scheme could be counterproductive, with increased demand pushing up house prices, making it even harder for first time buyers to get onto the housing ladder.

This worry is partly borne out by the latest CML data, which shows the average loan to a first time buyer in October was £119,500, the highest ever level. However, the average household income for first timers also rose to the highest ever recorded level, at £36,460 and the average multiple of income borrowed actually fell slightly last month.

Renters plan to buy

The surge in first time buyers looks set to continue next year.

A survey from Rightmove, of 17,000 renters, found that 32% plan to buy a property next year, up 6% from the same time last year.

Help to Buy was cited as a major factor, with 25% of would-be first time buyers pointing to the scheme as the key reason why they are now able to buy, particularly as the second phase is designed to help people with lower deposits.

The news will however make buy to let investors nervous. A reduction in the number of tenants, whilst supply rises as investors look to buy to let to supplement their retirement income, could see landlords having to cut rents to avoid properties remaining empty.

Arrears rates on the rise

A third survey this week shows that despite many renters hoping to buy a home next year, a growing number are struggling with arrears.

The Money Advice Trust has revealed that rent arrears is the fastest growing debt problem in the UK with its helplines receiving 20,000 calls in the first nine months of 2013, an increase of 37% on the same time last year.

Despite an increase in the number of first time buyers in 2013, rents have continued to rise and as wages remain static, whilst the cost of living increases, it’s clear many tenants are struggling to pay their rent on time.

Joanna Elson, Chief Executive of the Money Advice Trust fears “we are in danger of falling into a rent debt crisis”, whilst she suggests tenants struggling to pay their rent should work to a five point plan:

  • Don’t bury your head in the sand
  • Work out a personal budget and try to stick to it
  • Paying your rent is a priority over other debts
  • Ensure you receive any Housing Benefit to which you are entitled
  • Speak to your landlord

Tenants struggling to pay their rent can get advice from the National Debt Helpline on 0808 808 4000