When your dealing with those who are buying a home for the first time, quite frankly, clients don’t know what they don’t know.
So if we, our regulator, the Government, are in any way serious about first-time buyers, about widening access and growing the array of options open to them, we have to be honest about what follows.
More innovation means more product choice, more criteria differences, more schemes and more complexity. That’s progress, but for people who have never been through the process before it also raises the stakes. In that world, the need for advice shouldn’t be a ‘nice to have’, it should be a necessity.
Taken to its logical end, you can therefore make a perfectly reasonable case that first-time buyers should be required to take advice.
And this isn’t about a requirement for ‘enhanced advice’ or building new hoops. It’s about standard, regulated advice tailored to people most at risk of making a poor decision through no fault of their own.
Go direct to a single lender, and they’ll only ever see that one slice of the market. Agree to a developer’s recommended route without a second opinion, and you may not see the trade-offs hidden in the small print. And those are just two potential avenues that could be pursued. For a first-timer, that’s a big gamble to take on the biggest financial commitment of their life.
What does advice actually add here? First, whole-of-market comparison. A headline rate that looks cheap can become expensive once you add fees, cashback conditions, valuation charges, and the cost of a longer term. An adviser turns the marketing into a total-cost calculation over the period that really matters to the client, not just the initial fix.
Second, suitability. First-time buyers often sit at the junction of competing priorities: stretching to buy now versus other existing and future responsibilities; choosing a longer term fix over potentially shorter-term lower payments; building an exit plan to shorten it later; weighing a two-year fix with flexibility against a five-year fix with more expensive ERCs. None of that may be obvious to them at first glance.
Advice forces the ‘what ifs’ onto the table – income changes, job moves, relationship shifts, rate rises, not forgetting the ‘what do I needs’ such as protection, GI, conveyancing, etc.
Third, structure. Some first-time buyer routes are powerful but complicated. Shared ownership brings staircasing costs, rent reviews and lease considerations. Developer incentives can interact with valuations and genuine price.
Family-boost products and gifted deposits need clear documentation and a conversation about fairness and risk inside the family. Advice navigates those realities and records why one route fits and others don’t.
Fourth, accountability. A regulated recommendation has to be evidenced. It has to explain the alternatives considered, why they were rejected, and how the chosen path meets the client’s needs today and tomorrow. If we are expanding the menu of options – and we should – then someone needs to take professional responsibility for helping a first-timer choose from them.
There are two common objections to making advice a default for first-time buyers: cost and speed. On cost, the bigger bill is rarely the procuration and/or adviser fee; it’s the cost of a poor decision – the wrong term, heavy ERCs that block a move, a product that doesn’t play nicely with life as it actually unfolds. A single mis-step can dwarf any fee.
On speed, most advisers work to the client’s timetable, not the other way round. The modern advice journey isn’t ‘queue at a branch’; it’s phone, video, secure messaging, documents uploaded once, offer/AIP returned quickly, with a paper trail that keeps everyone on track.
This doesn’t lock out direct channels or innovation. First-timers could still start the journey direct, via a digital journey, but into this should be integrated an advice step. An advice trigger if you will. Where have we heard, and lost, that before?
Why? Well, the principle is simple: if you’re a brand-new borrower, you shouldn’t be left to navigate a growing, more complex marketplace on your own.
There’s also a Consumer Duty point here. If any group could be exposed to harm from getting this wrong, it’s first-time buyers. They really don’t know what they don’t know, and the market is moving under their feet. The regulator is exploring ideas like rent-payment data and refreshed stress-testing approaches that could help more renters buy. Good. But dialling up access should go hand-in-hand with dialling up advice and a recommendation.
Finally, mandatory advice for first-timers would help confidence – theirs and our market. Buyers would know they’ve had a proper and thorough review of all their options and potential risks. Lenders would know suitability has been tested and recorded. Developers would know their incentives have been independently assessed, reducing disputes at valuation and exchange. Conveyancers and surveyors would benefit from cleaner, better-prepared cases. The result being everyone spends less time unpicking avoidable problems.
This is about protecting first-time buyers so the first step they take is sustainable. If we want more people on the ladder, and if we’re going to keep adding new potential first rungs in the form of products and pathways, then we should also make sure someone qualified is helping them to make that first move.
Sebastian Murphy is group director at JLM Mortgage Services
