New data shows over a third of Millennials aren’t able to afford buying a house on their own
Two property experts discuss how this scheme could help with those struggling to enter the housing market
Boris Johnson has confirmed plans to extend the Right to Buy scheme to those who rent from housing associations, whilst enabling people to use their housing benefit to pay towards mortgages. In an attempt to combat the housing crisis – which has grown in the fastest pace in 15 years – the prime minister’s new plans could affect over 3 million households in England. Property concierge platform, Moveable, reveals that 36% of Brits aged 25-34 are waiting to get into a partnership/marriage before purchasing their first home because they simply can’t afford it on their own. Johnson’s £30bn benefit will enable ‘generation rent’ to abandon astronomical rental prices, and lay down the foundations to own their first home
Through the Right to Buy scheme, tenants could get a discount of up to 70% of the market price, depending on how long they have lived in the property. Now, Johnson’s new “benefits to bricks” policy will additionally enable young people to pass affordability checks needed to get a mortgage. He is also expected to announce a review of the mortgage market to search for ways to reduce people’s deposits. Ministers have stated that more than half of those in the private rented sector can afford to service a mortgage; however, only 3% have enough savings for a deposit.
In light of the announcement, property experts, David Hannah and Simon Bath, discuss how the new announcement will expand the opportunity of home ownership, especially to those on low incomes and the younger generation.
David Hannah, Group Chairman of Cornerstone Tax comments:
“The government’s introduction of the Right to Buy scheme is welcomed. It is a great initiative that will aid buyers (especially first-time buyers and those on low incomes) in purchasing a property. However, I think rising interest rates, inflation and the cost-of-living crisis remain serious hurdles in preventing housing from becoming affordable for all Brits.
“With house prices reaching new highs, buying a home has become more unachievable, especially for low to middle income households. If prices continue to rise, then this scheme will become even more important for people looking to get onto the property ladder. However, the government must ensure that it has been meticulously evaluated before introducing it, rather than it being a ‘quick fix’.”
Simon Bath, CEO of iPlace Global, the creators of Moveable comments:
“With a series of socio-economic crises impacting the ability for people to get onto the property ladder, the prime minister’s announcement could potentially act as a stepping stone for many – particularly for the younger generation and of course people on living in social housing.
“When this initiative was introduced in the 80s, it gave over five million households the chance to own their home. While it’s a step in the right direction to assist the new generation with property ownership, we must ensure that more social housing is also being built, so that there are still options for those who may not be able to buy a home and who need it most.
“There will still be those on low to middle incomes struggling to secure a mortgage because of the difficulties of raising a deposit. With disposable income declining and energy prices going up again in October, it’s important to make sure that every person in the country has the equal opportunity to own a home.”