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 at 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.
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."
Also commenting on Boris Johnson's speech, Dan Wilson Craw, Deputy Director, Generation Rent, said, “Ultimately the Prime Minister failed to set out action to deal with the unaffordable level of house prices and rents. Neither the review of low-deposit mortgages, nor extending right to buy to housing associations will address the shortage of homes we need in places people most want to live."
"For that we need a programme of social house building beyond the one-to-one replacement of homes bought under Right to Buy."
“In the pandemic we heard from renters who had to pay rent with their hard-earned savings because they weren’t eligible for Universal Credit. Expanding eligibility to people saving a deposit will restore some fairness to the benefits system, but it’s important to remember that many more people with no savings are struggling to find somewhere to live with current Local Housing Allowance rates."
“Expanding housing benefit to cover mortgage payments is unlikely to help people currently receiving benefits to secure a mortgage when they won’t pass lenders’ affordability tests. However, depending on how lenders respond, it may help first-time buyers in work to get a mortgage. Right now if you lose your job there is nothing to fall back on and that’s a risk for lenders.”