FINANCE
Godsend or gimmick?
EXPERT COMMENT The benefits proposal is a bit left field and I’m not sure lenders will like it. Using benefits, especially housing benefits or Universal Credit, is not ideal to base a mortgage on and even if it is used it is unlikely to boost borrowing eligibility enough
The Government has promised yet more reforms to make it easier to get on the housing ladder. Kay Hill looks at the latest proposals and the industry reaction
to make a big difference. As far as the new Right to Buy scheme is concerned, this may help some but it is a bold claim that every house sold will be replaced by another to ensure social housing does not reduce further. Given the fact that the
Before his resignation just as we went to press, Prime Minister Boris Johnson was once again talking about the housing market. His speech, delivered in Lancashire, came at the end of a week in which he’d narrowly survived a vote of no confidence, so it was important to attempt to convince listeners that it was business as usual. After a lengthy speech covering everything from stagflation to the price of bananas, the then PM turned to the cost of housing – beginning with some depressing facts and figures, “Just this year alone the price of a home in the UK has soared by an average of 9.8% to an average of £278,000 - £24,000 higher than this time last year. And in 2021, prices rose faster than wages – so that if you’re one of the millions on the outside of the market looking in, for every week and month that goes by, the dream of ownership recedes further into the distance. “The average age of first time buyers has been rising continuously, the proportion of young people who can afford to buy their own home has been falling. The challenge facing first time buyers today is far greater than anything we have seen before – 20 years ago, in 2002, a home cost an average four and a half times your income. Today that multiple has risen to nine times your income. We have a ludicrous situation whereby
plenty of younger people could afford to make monthly payments – they’re earning enough to cover astronomical rent bills – but the everspiralling price of a house or flat has so inflated deposit requirements that saving even just 10 per cent is a wholly unrealistic proposition for them. First time buyers are trying to hit a continually moving target.” After playing the usual political blame game, “We’re building as fast as we can, and after a sustained decline in homeownership rates under the last Labour government, that rate is now starting to climb thanks in part to our decisive action to support first time buyers and build more homes,” he also made some promises for the future. These are set out below, although with the Government now in a state of turmoil, and ministers changing by the minute, their current value is as uncertain as everything else in the world of politics!
Government has failed to get close to any housebuilding targets, this seems a big ask. As ever, the devil is in the detail, and the Government has a record of announcing so-called market-changing initiatives only for them to achieve very little. A review of the mortgage market to see if deposits can be reduced borders on farcical. Borrowers can get loans with a 5% deposit already and reducing that further just means that more are at risk of negative equity if things go wrong. The Government would be better to nationalise a housebuilder and build affordable housing in places people want to buy or create new places complete with infrastructure. Andrew
PROMOTE HOUSEBUILDING
Montlake,
According to Johnson, “Michael Gove has been developing plans to work hand in hand with local communities to build more of the right homes in the right places. We are going to put more publicly owned brownfield land to use and seek to unlock
broker Coreco
MD, mortgage
112 First Time Buyer August/September 2022
FTB 112-113 Finance August-September22.indd 112
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