Left wing renter groups slam Labour for prioritising first time buyers

The ink was hardly dry on Labour’s plan for a mortgage guarantee scheme for first time buyers before some left wing renters groups attacked the idea.

The London Renters Union - part of the controversial 20-group Renters Reform Coalition - says Labour’s Freedom To Buy proposals “would leave millions of renters trapped in extortionate and insecure homes.”

A statement from LRU adds: “Labour has not made any spending commitments on social housing. Instead, the party is relying heavily on private house-builders who overwhelmingly build expensive market-rate housing out of reach for many.”

And a spokesperson for the London Renters Union comments: “We can’t end the housing crisis with home ownership alone. Without fixing our rigged rental system, millions will remain trapped in extortionate and insecure homes for life.

“… Renters need the next government to introduce rent control, and in the long-run, move us back towards a system with a much greater proportion of public housing.”

And Acorn - another renters’ union - tweeted: “Let’s not beat around the bush, this is going to do next to nothing to solve the housing crisis that is gripping the country. This is using public money to keep house prices artificially high, exacerbating the problem and not fixing it.

“We need bold solutions from the next government, not just a redressing of the shop or fiddling round the edges of a housing system that is broken.”

Generation Rent had criticised the Labour policy even before it was officially announced, with a statement saying: "Renters deserve security too. While attention to the housing struggles of young adults is welcome, our work or personal circumstances mean not all of us are able to live at home with parents until we save enough to buy our first home. 12 million people are privately renting right now and more than half of us have no savings at all.

“Trying to put aside a house deposit while renting is like pushing a boulder up a hill that keeps getting steeper and steeper. The next government must slam the brakes on soaring rents by limiting the current free-for-all that’s forcing a third of renters’ incomes straight into the pockets of landlords.

“This proposed scheme would make permanent the existing ability for people to buy their first home with just a 5% deposit. But 5% still means £12,497 on the average first time buyer mortgage, and as much as £21,669 if looking to buy in London. If rent rises continue to outpace wage growth, more tenants could face homelessness than benefit from this scheme.”

Meanwhile the Labour Freedom To Buy scheme has been greeted with some scepticism from the mortgage industry.

The news agency Newspage canvassed industry opinion, and Lewis Shaw, owner of Shaw Financial Services, comments: "This policy is about as useful as a chocolate teapot. Prior to the pandemic, 95 per cent loan-to-value mortgage lending was the norm. It happened without any political interference or putting the taxpayer on the hook. Has everyone forgotten that? If this is the extent of their ingenuity to get people on the housing ladder then god help first-time buyers. If Labour really wants to help young people buy a home, then do the things that we all know are needed: Tax the super-rich, reduce wealth inequality and build more houses. It's not rocket science."

And Katy Eatenton, Mortgage & Protection Specialist at Lifetime Wealth Management, appears to be similarly critical. She says: "Yet another scheme with no real substance. The existing mortgage guarantee offering has had limited take-up and this will be no different. We need to be building properties that first-time buyers can actually buy. Unless this happens and the properties are priced correctly, not with a built in premium that leaves them in a negative position when it is time to remortgage, none of these minimal deposit schemes are fit for purpose."

Justin Moy, Managing Director at EHF Mortgages sees it this way: "Freedom to Buy looks great on the first read, but then you realise it’s actually been in place since 2021 and many lenders don’t use it anyway. Labour are effectively promoting something that already exists and isn't used. There's less smoke and mirrors on the Paul Daniels show."

And Stephen Perkins, Managing Director at Yellow Brick Mortgages, piles on the criticism. He states: "Like most of Labour's policies, this seems to lack any real substance. The Mortgage Guarantee scheme has become almost obsolete with standard 5% deposit mortgages available, and even 1% deposit options on other schemes from lenders. House building targets are great in theory, but not if developers are not building truly affordable homes. It is pointless to have "first dibs" on properties that remain unaffordable to most first-time buyers. This policy will not hugely impact the property market and, I dare say, won't inspire much change in votes either."

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