The government has announced plans to extend the Right to Buy scheme to those who rent from housing associations and also enable people to use their housing benefit to pay towards mortgages.
In a speech in Blackpool on Thursday, the prime minister Boris Johnson announced that two and a half million tenants renting their homes from housing associations will be given the right to buy them outright.
Currently, tenants in council homes are eligible to buy their homes at a discounted price, up to 70% off the market value dependent on how long they have lived there. However, the scheme is less generous for those in homes owned by housing associations.
The government is also to launch an independent review of access to mortgage finance for first-time buyers, with the aim of making it easier for this group by widening access to low-cost, low-deposit finance such as 95% mortgages.
The Prime Minister has also pledged to turn ‘benefits to bricks’ – changing welfare rules so that the 1.5 million people who are in work but also on housing benefit will be given the choice to use their benefit towards a mortgage, rather than automatically going directly to private landlords and housing associations.
Karen Noye from Quilter said: “In Blackpool today, Boris Johnson tried to persuade the public to move on from the ‘partygate’ scandal by announcing a slew of new housing measures. One of those announcements was a review into the mortgage market, which will report in the autumn. However, the details of what this actually means is yet to be seen.
“By his own admission, there are a healthy supply of high loan to value mortgages available so what this review will uncover is anyone’s guess. The crux of the matter is that it is not the mortgage industry that needs fixing but the housing market and its sky high prices. Part of the reason why house prices are soaring is because there are so few properties out there. Build more stock and the scramble for properties, which is pushing prices ever higher will come to a halt. This would in turn help generation rent whose dreams of owning a house are unfortunately just a dream at present.
“We have seen time and again government housing schemes falling very far from the mark even if well-meaning. A good example is Help to Buy, which has for some been disastrous and contributed to lining the pockets of housebuilders while not actually helping as many people as hoped.
“Ultimately we just need to build new homes in areas that people actually want to live rather than soulless out of town developments. Doing this would be far more powerful than tinkering around with ways to help people finance their first home. Although this point does need to be addressed the problems young people and renters face across the nation are akin to Frankenstein’s monster with every housing policy or proposal ultimately making the beast harder to tame. A good example of this is the stamp duty holiday which did very little to help first time buyers bar putting house prices even further out of reach. The only tried and tested way of helping people buy their first home is by sticking to the laws of supply and demand. Simply put if you build more desirable houses, prices come down and people have a fighting chance of getting on the housing ladder.
“Johnson may be in luck though and prices will come down regardless. The nation faces a dire financial picture with rising inflation and interest rates rising as a result. All this could ultimately cause house prices to slump on their own.”
