Advertisement
Christmas Special - Get your first 12 issues for just £12
SUBSCRIBE
Housing

Labour unveils 'ambitious' plan to help people buy their first home. But is it enough?

Keir Starmer told Rishi Sunak the dream of homeownership is dead for young people in Tuesday’s televised debate. Now he has unveiled his mortgage guarantee plan to help youngsters buy homes

Keir Starmer announces Freedom to Buy mortgage guarantee scheme

Keir Starmer said the dream of owning a home is dead for young people under the Tories. Image: Jeff J Mitchell/Getty Images

Keir Starmer has unveiled his plan to help over 80,000 young people into homeownership with Labour’s Freedom to Buy mortgage guarantee scheme.

The favourite to be prime minister after the general election on 4 July said Labour would make the existing mortgage guarantee scheme permanent, and rebrand and re-market it to make it more attractive to lenders and buyers.

The current mortgage guarantee scheme has been running since April 2021 and sees participating lenders offering 95% mortgages under a government guarantee.

The scheme is set to expire in June 2025 but Starmer said making it permanent would offer certainty and stability to improve take-up.

The announcement comes just days after the Labour leader told Rishi Sunak that the dream of owning a home was gone for young people in the first televised general election debate. The prime minister agreed it was “too hard” for youngsters to get on the housing ladder but accused Labour of making it harder through higher taxes.

Starmer said: “After 14 years of Conservative government, the dream of homeownership is out of reach for too many hard-working people. Despite doing everything right, they can’t move on and up. A generation face becoming renters for life.

Advertisement
Advertisement

“My parents’ home gave them security and was a foundation for our family. As prime minister, I will turn the dream of owning a home into a reality.

“Our changed Labour Party will be on the side of the builders not the blockers, to get Britain building again. My Labour government will help first-time buyers onto the ladder with a new Freedom to Buy scheme for those without a large deposit, and by giving them first dibs on new developments. Labour backs hard work and ambition, and will clear the way for the opportunity to own a home. It’s time to stop the chaos, turn the page and rebuild Britain.”

Labour said the new scheme will help first-time buyers who struggle to save for a large deposit and can’t rely on relatives to help them find the cash.

Both Sunak and Starmer were asked about census figures that showed the most common living situation for young people aged 20 to 24 years of age was living with their parents in the debate.

That’s because rising house prices have sent the deposits surging while record-high rents restrict the possibility to save up for one.

The result is first-time buyers have to rely on the bank of mum and dad. The opposition party cited research from the Institute for Fiscal Studies that found half of young first-time buyers now receive financial support from family to buy their home, with an average gift of £25,000.

Labour said the best way to give young people the freedom to move out of their childhood home is to build more properties. The party has pleaded to build 1.5 million over the next Parliament.

It is unclear how many of these homes will be social homes – the Big Issue’s blueprint for change is calling for all political leaders to commit to building more affordable and social homes over the next government’s term.

But the party also claimed the Tories are currently not planning to extend the mortgage guarantee scheme beyond June next year and that would leave 65,000 young people denied the chance to own their home.

The average value of a home purchased under the scheme is £202,000, according to Labour, who also claimed the price is reportedly almost as much as the £210,000 South Kensington flat Sunak bought as his first home with a six-figure loan from his parents.

Labour’s proposals to tackle the housing crisis – including pledges to reform the planning system, build on the grey belt and reintroduce housing targets – earned praise from housing developers, insurers and YIMBY campaigners.

Robert Sinclair, chief executive of the Association of Mortgage Intermediaries, said: “By delivering a permanent support facility, this will give the whole market confidence and avoid the stop/start nature of previous initiatives. Getting more first-time buyers onto the housing ladder through such innovation will deliver a much-needed boost to consumer confidence and the wider economy. 

“By combining government support with lender assessments, the mortgage advisor community will be able to ensure as many working people as possible can benefit from this scheme. By reducing deposit requirements more people will attain their dream of owning their own home.”

Freddie Poser, executive director at PricedOut, added: “PricedOut welcomes the ambition to finally tackle the UK’s intense housing shortage by getting much more supply where it is most needed.

“This is the only way to solve the housing crisis and finally give young people a chance at homeownership again.”

But Ben Twomey, chief executive of Generation Rent, called on the party tipped to take power to take action to support private renters too.

Twomey said first-time buyers still need to find £12,497 for a deposit on a 5% mortgage – rising to £21,669 in London – and that’s a tall order for renters.

“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,” said Twomey.

“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.

“If rent rises continue to outpace wage growth, more tenants could face homelessness than benefit from this scheme.”

Do you have a story to tell or opinions to share about this? We want to hear from you. Get in touch and tell us more.

Advertisement

Change a vendor's life this Christmas

This Christmas, 3.8 million people across the UK will be facing extreme poverty. Thousands of those struggling will turn to selling the Big Issue as a vital source of income - they need your support to earn and lift themselves out of poverty.

Recommended for you

View all
Ending post-Grenfell cladding crisis could take until 2035 and beyond: 'Unacceptably slow'
Grenfell tower
Cladding crisis

Ending post-Grenfell cladding crisis could take until 2035 and beyond: 'Unacceptably slow'

We've given 50,000 haircuts to homeless people – here's how a simple trim can change everything
Photo of man hugging a woman to illustrate a story about the Haircuts 4 Homeless charity
Homelessness

We've given 50,000 haircuts to homeless people – here's how a simple trim can change everything

Cash-strapped council warns it's at breaking point as neighbour places homeless people in its town
homeless peoples' tents in street
Homelessness

Cash-strapped council warns it's at breaking point as neighbour places homeless people in its town

Homeless families occupy council housing offices on Halloween in plea to fix 'houses of horror'
Homeless families at a protest about council housing
Homelessness

Homeless families occupy council housing offices on Halloween in plea to fix 'houses of horror'

Most Popular

Read All
Renters pay their landlords' buy-to-let mortgages, so they should get a share of the profits
Renters: A mortgage lender's window advertising buy-to-let products
1.

Renters pay their landlords' buy-to-let mortgages, so they should get a share of the profits

Exclusive: Disabled people are 'set up to fail' by the DWP in target-driven disability benefits system, whistleblowers reveal
Pound coins on a piece of paper with disability living allowancve
2.

Exclusive: Disabled people are 'set up to fail' by the DWP in target-driven disability benefits system, whistleblowers reveal

Cost of living payment 2024: Where to get help now the scheme is over
next dwp cost of living payment 2023
3.

Cost of living payment 2024: Where to get help now the scheme is over

Strike dates 2023: From train drivers to NHS doctors, here are the dates to know
4.

Strike dates 2023: From train drivers to NHS doctors, here are the dates to know