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Now is the time to take forward a ‘key’ manifesto promise to allow young first time buyers the opportunity to take out long-term fixed rate mortgages of up to 95 per cent of the value of the home they wish to buy, said Prime Minister Boris Johnson in his address this week to the virtual Conservative Party annual conference.
‘I know that many people are of course happy with renting and the flexibility that it offers’, he said. ‘But for most people it is still true that the overwhelming instinct is to buy.
‘Many of them simply can’t – not because they can’t afford the mortgage, but because they can’t afford the deposit’.
The ‘disgraceful truth’, said the Prime Minister, was that levels of owner occupation for the under forties have plummeted in this country. ‘Millions of people are forced to pay through the nose to rent a home they cannot truly love or make their own, because they cannot add a knob or a knocker to the front door or in some cases even hang a picture – let alone pass it on to their children’, he claimed.
By allowing 95 per cent LTV mortgages would vastly reduce the size of deposits needed, ‘giving the chance of home ownership – and all the joy and pride that goes with it – to millions that feel excluded’.
Government action to reform planning and house purchase finance could create 2m more owner occupiers, the biggest expansion of home ownership since the 1980s.
‘We will help turn generation rent into generation buy’, said Mr Johnson.
The Prime Minister’s rhetoric was greeted with less than unqualified enthusiasm by representatives of either the private rented sector or the homeless.
For the National Residential Landlord’s Association, policy director Chris Norris said
those who want buy their own home should have the opportunity to do so, but ‘the Prime Minister is wrong to imply that renters cannot turn the properties they live in into a home of their own. Indeed, landlords much prefer to have tenants settled long term in a home they feel comfortable in and want to look after.
‘If the Government really wants to support home ownership it should consider changes to the tax system to support and encourage landlords considering leaving the market to sell to first time buyers.
‘Reports that Ministers are considering an increase in Capital Gains Tax would serve only to incentivise landlords to hold on to properties longer than they might otherwise have done’.
For the homeless charity Shelter, chief executive Polly Neate said the Prime Minister should stop selling pipedreams and start facing reality. The only way we will make a dent in the housing emergency is by increasing the number of secure and genuinely affordable homes, and that means building decent social housing’.
‘Average house prices are now eight times the average salary in England, meaning most people cannot afford to take on a 95 per cent loan, she pointed out. ‘Many of those who’ve seen their incomes decimated during this pandemic are young people and families in desperate need of a stable home – buying is just not an option for them.
You have to question whether the Prime Minister is in touch with reality, he is talking about giant mortgages at a time when more than 320,000 private renters have fallen behind on their rent as a result of Covid-19. Offering up huge loans and even more debt is the wrong answer to the much bigger problem of rising housing insecurity in this country’.