Freelancers struggle to get on the property ladder

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Date: 2 March 2021

A self employed couple manage to buy their first home

It is "more difficult than ever" for freelancers to buy a home, as new research shows that 59% feel they're being penalised for being self-employed when trying to get a mortgage.

A survey of UK freelancers by the Association of Independent Professionals and the Self-Employed (IPSE) and CMME has found that the pandemic is making it even more difficult for freelancers to get on the housing ladder.

The findings show that financial uncertainty is affecting freelancers who are planning to buy a home in the next five years. In this group:

  • 63% are concerned about the state of the UK housing market;
  • 75% are worried they don't have the job security to get a mortgage;
  • 60% are concerned they would not be able to afford a mortgage;
  • And, of these, 77% are worried getting a mortgage will be more difficult because of their self-employed status.

However, many freelancers are not even contemplating buying their own home. Of those who are not homeowners and are not planning to buy, one in four (25%) said the main reason was worries about the pandemic. Another one in five (20%) said they had used up all their savings during the pandemic.

Of those freelancers who have already got a mortgage, 25% said it had been somewhat or very difficult - and of these, almost all (96%) said the main reason was that they had had to provide more paperwork because they were self-employed. In fact, 70% said that some lenders simply would not consider them because of their self-employed status.

"One in four self-employed professionals have experienced difficulty getting a mortgage, as traditional lenders have struggled to assess their true borrowing power, often resulting in them lending less, offering a poor deal or simply saying no," said Mike Coshott, ceo at CMME.

Chloé Jepps, IPSE head of research, said: "Getting a mortgage has always been more of a challenge for freelancers, but in the pandemic - the financial impact of which has disproportionately hit the self-employed - it is more difficult than ever.

"In the context of the pandemic, a significant proportion of freelancers are not considering buying a home at all - either because of the sheer financial uncertainty, or because they have lost so much of their savings.

"With extreme financial anxiety across the self-employed sector, as well as widespread reports of lenders unfairly adding to the obstacles facing freelancers who want to get on the housing market, it's clear the sector needs more support from government. Without intervention, there is a risk many thousands of freelancers will have to put their house-buying plans on ice for years to come - or even give up on the dream of home-owning altogether."

Although there is uncertainty about how to get a mortgage (49% of those planning to buy in the next five years said they did not understand the steps to get a mortgage), the findings also show that many freelancers are turning to mortgage brokers. Nearly two-thirds (65%) of those who planned to use a broker to find a mortgage believed they were helpful for getting self-employed people better rates, while two-fifths (42%) said it was easier than going directly to a lender.

Written by Rachel Miller.

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