The government is considering allowing renters to buy their first homes with just one per cent deposits, according to press reports over the weekend.
The Independent online newspaper claims that the government is considering the scheme as a radical variation of the previous Help to Buy scheme, which saw some buyers able to purchase new build houses with only five per cent deposits.
Banks and building societies would have their mortgages - possibly up to 99 per cent of the property value - guaranteed by the government, according to weekend reports.
However there remains scant detail about the idea, with no reference as to how this would help first time buyers pass payment affordability tests, even if they could afford the drastically reduced deposits required.
The house building industry has backed the idea, saying it can’t build more homes - and this boost supply - unless more people can actually be able to purchase them.
Labour deputy leader and shadow housing secretary Angela Rayner was quoted in the Independent saying the idea “completely failed to address the supply of affordable homes, or lift a finger to reform our broken planning system which has forced a generation of young people to give up on the dream of home ownership.”
And an unnamed senior Labour figure told the paper: “The truth of this issue is that you can’t have a serious housing policy without a real plan to drive up supply.”
The Liberal Democrats also spoke against the idea, claiming it was ironic that the party responsible for higher mortgage rates - as a result of the Liz Truss premiership - now wanted first time buyers to have 99 per cent mortgages.
Almost immediately after the main story appeared online it was the subject of criticism by a leading activist in the Generation Rent group.
From his personal X/Twitter account, group deputy chief executive Dan Wilson Craw posted his view of the idea: “So risky - extra demand could fuel price increases that lock even more renters out of ownership, or leave borrowers vulnerable to negative equity at the slightest dip in the housing market. Maybe they should get some housebuilding targets in place before playing with fire.”
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What could go wrong 🤷♂️😱 HM Government getting involved in housing 🤔. All well and good, but the lower the deposit, the higher the monthly payments. Not really conducive for an affordable lifestyle.
When we bought our first property in 1974 it was £11,750.The most we could borrow was £6750 Three times my husbands salary and half mine. .Non deterred were able to get an option mortgage from the council for £11.000 at 1/2 % MORE than the mortgage rate at the time. Little did we know what was to happen. We had the 3 day week mortgage rates at 15 % (15 and1/2% for us) extending our mortgage to 40 yrs so we could make the payments. Whilst my husband was on strike,I was able to increase my hours as a nurse and we survived. Whilst people think it’s hard now it was hard for us too.we cycled to work 17 and 10 miles as we couldn’t afford a car or the bus fare,we used the laundrette as we couldn’t afford a washing machine,All our meals were home cooked ,no takeaways or meals out, black and white TV and most significant no weight problems!!! And despite all that we were VERY happy.
Provided that they used Fujitsu's computer system, nothing could go wrong!
Hi Sue, though I did not buy my property until late 80's I, like many others sacrificed a lot in order to get on the property market. I completely agree with the sentiment of your comment.
Completely agree Simon. Also - am appalled that they think about bringing something like this in - just before prices may drop, and at a time when it will lock FTBers in at the absolute peak of interest rates. I don’t believe the timing of this is an accident.
Best leave housing to the market. Stay out of it HMG.
Last year Skipton BS offered 100% mortgage to 'FTB who could afford the repayments'. It would be interesting to know how many have taken up this offer.
IMO its not just the deposit that stops people buying, but the payments - often significantly more than rent because of the repayment part.
And of course once they are home owners there are the repair bills as well, and insurance cover to be paid
Two of my tenants want to buy their homes. I think it's it's great idea. I like my tenants to be upwardly mobile.
i'm with you Alison. Just think that sensible safeguards are in place for a lot of people this will help them get on the property market.
Maybe these money saving experts should turn their attention to what do you really need to live these days, but of course that would not have the same appeal!
They love making a mess before they were giving B2L landlords 120% Mortgage’s now partly as a consequence they want them dead a buried.
1% Mortgage’s for first time buyers how do they pay the rest ? well not a hope they’ll be paying when in retirement at least with renting they can throw in the towel or move their location if necessary and get on with their lives.
40 year mortgages should do it. There will be a chunk of people whom this will work, more will prefer to carry on renting. As long as proper safeguards and assessments are put in place I do not see the issue.
There will always be gamblers who will bite of more than they can chew, but for others they will manage fine.
We say Government interference, but hey who put the rules there in the first place
I mean ultimately people should own their own home yes.
But if they’re allowed to put down just a 1% deposit, on a repayment mortgage , the monthly payment then would surely outstrip the value of rent pcm? When you consider things like maintenance costs and such?
And ie “can’t build more houses” is a tiny bit of a fib, as they have been under building for years. And if they will only start building more with a scheme like this in place, lt
Sounds like it would not be a “help to buy” but more of a “help to sell” scheme as prices would be far over inflated.
But time will tell I’m sure.
Yes Steven help to sell I wounder how many MPs that lose their seats end up on the board of these developers, stinks doesn't it?
I sold my property to a working tenant (a single mother), who had more than half of the value as a deposit, an inheritance from her grandmother. She clearly saw that's the only way she could afford her repayments for a mortgage from Barclays.
The only reason why much needed housing would remain empty after being built is if the developers are setting the prices too high. Why should we as taxpayers subsidise developers and lenders profits by giving such guarantees. If taxpayers are to subsidise the cost of new build housing it should be social housing.
I think we can do both, but yes I would want more social housing. But, for some this will be a genuine help to get on the property ladder.
I agree with comments above that i'm sure some shady people will have the snout in the trough. That said in this country we aspire to own our houses!
Its nothing to do with helping first time buyers that’s the ruse.
It to help the Big Boys desperate to sell their over prices, many flimsy constructed, unsuitable high rise Boxes in The Sky, now you got that, Also for the Corporate Companies, Institutions and Pension Funds etc to take over the Private Rented with unfair competition with many rules that don’t apply to them.
Private landlords supply rental property in all parts of the
Country in all price ranges, unlike the Big Boys multi story only in prime locations in Towns & City Centre’s to make a killing and not individual houses.
I am assuming that this scheme does not just apply to new builds.
With my own tenants I have said that in order to afford a property they should let a room under rent a room scheme. I still do this as my married couple whom lived with me for almost 10 years are now firm friends and we all get on fabulously.
My own parents back in the 50's lived with their landlady until they could have afforded to buy. They had the opportunity to buy the property in Highgate, London. Couldn't quite afford it. If they could have they would have been able to retire as millionaires 20 odd years ago. House converted to 3 flats, each flat over £1,000,000. Shame the 1% deposit was not available then!
I became a Landlord as my Dad always said he had wished he'd put some money into housing.
Andy I'm sure it will only apply to new builds
Just 1% down madness in a few years most will have been repossessed from bankrupt owners
They are paying over priced, Developers prices so they are in negative equity immediately.
I seen the enterprise zones in the 60’s like Skelmersdale, Lancashire, when big Companies got tax free incentives for 7 years to move into the area. Houses Builder came and built lovely brick houses everyone was buying.
Seven years down the line the Companies were pulling out house windows boarded up and houses abandoned in some cases couldn’t give them away.
I suppose its what happens when you distort the market with temporary solutions.
I'd be happy to sell mine at market value to my tenants... Bring it on!
For once I have to agree The Craw, this will push prices ever higher which is good for me and everybody else on this forum. Still does not help the poor guys who cannot afford a property and the reality of this is the property ownership model is drifting further way from them.
Developers who have MP's in their pocket or on the payroll should be looked at very closely, especially Gove...
Like others noted above, I think it's an excellent idea. We need lots of ways to increase home ownership and this would be a good way. When first mooted, the plan had some safety clauses such as the tenants had to have lived in the property for over 6 months before applying, and obviously needed to be mortgageworthy. When the tenants had been accepted for the scheme, the next six-months rent was deemed to be part of the deposit - so still paid to the landlord. And allowing tenants to then rent-a-room would be a good way to ensure viability.
my worry there Tim is who are they renting that room to
The notion that building more social homes is going to significantly take the pain out of the housing conundrum is flawed.
Gov has no money, and the cost of building has/is rising exponentially.
With £ 2 trillion national debt to deal with, it will be decades before any real progress can be made.
So true, which makes me even more certain that my help to my children is the right thing to do, we sold one of our BTL’s and gave the money to our children, this has meant a huge deposit and low repayments for them, but more importantly…. No renting 👍🏻 God help the generation to come. You have to look after your family first.
If they did build them they wouldn't maintain them
The family unit should support each other. Children shouldn't leave home in a hurry. I know someone who has a son and daughter, both her children lived at home with their partners until they managed to buy, saving the cost of renting. The 3 bed house was crowded but they all put up with it.
Agreed John that's the old way, we lived at home with parents until we had bought, renovated and were ready to move in, it worked
I was born in my granny's 2 bedroom council house in 1949 and lived there for a further 2 years until my parents got their own council house.
I can't remember a time when my granny didn't have either a young couple or a couple of lodgers in her spare room- two burly miners sharing a double bed!
Occasionally my granny and grandpa slept on a bed settee in the living room and a second pair of burly miners used their bedroom.
I remember earning good pocket money going to the corner shop for the lodgers' beer or fags and taking the empty bottles back for the 3d deposit.
Perhaps fewer restrictive rules would alleviate the housing shortage and generate useful income for school kids willing to walk to the local shops a few times every day?
Sounds like sub prime to me!
I have thought for many years that tenants should have a one chance mortgage offer, backed by the government. I have many tenants who have been good payers for many years, sometimes decades. They are good at paying rent, but often fall foul of old debts and the tyranny of credit rating agencies.
Without help, they have almost no chance of buying their own homes. With the current cost of BTL mortgages, increased stamp duty, the rental reform bill and s24 interest changes dampening the enthusiasm of portfolio landlords and deterring new potential landlords from entering the PRS, there is a terrible outlook for tenants in the PRS. As the market has changed and tenants are not able to move on, I have started to ask my tenants what they intend to do when they retire, as the increased rents will not be affordable on small pensions or lower incomes. None of them have any plans in place and most had not considered this at all. I fear that many of them will end up in shared accommodation. Any option that helps even some tenants out of renting should be welcomed. The reaction of generation rent and Angela Raynor, shows the extent to which they are happy to play politics with peoples lives, rather than looking at the problems of the PRS with a view to solving them. Does anybody really believe that three million extra council houses will be built?
I believe that there is a major element in the UK housing market which is never properly discussed.
The social housing sector is a huge and unfair distortion of the housing market. We need to discuss what social housing is for. Is it to house those most in need, or is it a mass alternative to the PRS and home ownership? This may have worked in the fifties when there wasn't such a huge demand for housing, but it does not work now.
With the shortage of affordable housing of all types and from all providers, I believe that the social housing sector should be utilised to house those in most need, rather than those who happen to be lucky/connected enough to get one of the increasingly rare newly available properties, or are already living in a social housing unit.
I have tenants struggling to get by on benefits, for many different reasons, unemployment, mental health problems and disabilities, amongst others. My struggling tenants are subject to market rents and the ever rising costs of tax changes, interest rates, licensing schemes and the general scarcity of stock. Often they live side by side with social tenants who live in identical houses but only pay between a third and half of the rent they have to pay. The social housing tenants are often in full time employment and therefore much more able to afford to buy or rent privately. There is no incentive to leave subsidised social housing, even if they can afford to. Perhaps, if those who are working, wish to remain in social housing, they should be asked to pay a market rent. This could provide funds for the social housing provider to acquire more properties. Are our local authorities buying votes with public housing? Are they allocating housing to client groups, more likely to vote for them?
As a landlord, I have always tried to let my properties to those who are vulnerable or in great need. I have kept my rents at a reasonable level and tried to behave responsibly. I feel that those days are over. I feel I can no longer take the risk with non-ideal tenants, especially with the promised repeal of section 21. None of these major changes to the PRS are a choice of landlords, yet we will, in the best spirit of propaganda, be blamed by everyone.
The real losers in all of this will be poorer, vulnerable tenants. This situation is going to get much worse in the coming years. Both political parties, local authorities and the narrow minded activists of Shelter, Crisis and Generation rent are all playing their part in this debacle.
Agreed with every point Matthew, bigger question is should social housing run by councils be means tested in relation to rents? The council could raise money that way rather than slapping landlords to the point of bankruptcy.
Matthew, well done for your work for vulnerable tenants. There are few landlords who would do that as a business model. I know I couldn't.
My late parents married in the 50s and moved in with my paternal grandparents in a large privately rented house where I was born a year later. Curiously I now live in an almost identical house. They applied for council housing, my father being a low paid telephone engineer with the post office. A new estate was being built and we were lucky to have the tenancy of one of the semi-detached two bed houses. Our neighbours were all working class, an ambulance driver, a dustman, a nurse, a labourer. Even then you could tell, usually by the state of the gardens and front doors, who took pride in their homes and those who felt the council should do everything. My parents kept the garden tidy and my father painted the front door and woodwork regularly.
When I would visit after the Right to buy came in, my mother would point out which houses in the crescent across the road, had been bought. I didn't know she knew so many people. She didn't. She just saw who had tidied the garden, repainted etc. Strange that people took pride in the property once it was theirs.
Can't touch ''vulnerable'' tenants as you just know they';ll be trouble, we aren't charities, the right place for vulnerable tenants are council properties
Andy M, I came very close to buying one in Highgate in mid 60’s it was £4’600.00. What was putting me off I could have got one as good really for £2’300.00 on Woodgreen. Anyway I decided to travel and follow the work for the better money, the rest is history.
I let mostly to working shares so there rents are quite low.
How could they possibly buy a shared property obviously they are not going to buy it between them, which one would own it ? and there’s always someone moving out and being replaced and one individual is not going to be able to buy it. I have some families having most or all of their rents paid by Benefit system they at not going to be buying anything. I don’t know any family renting who are not claiming some Benefits so they are not going to be buying anything.
It's all based on a stereotype of a hard working couple or family and their rent being higher than a mortgage would be. It's not a plan for sharers and it doesn't take into account that rent covers maintenance costs. I recently had some roof work done at over £5000, and my tenants were very glad they did not own the house, and only paying £800 pcm rent.
Worried landlord
The reason or excuse that Thatcher used for selling council houses to tenants at knockdown prices, was that maintenance costs were very high. The reason why London house prices are very high is that the industrial base, in mainly labour strongholds, was liquidated,and poured into the south east property market.
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