What happened to Boris’s plan?
Back in June, then Prime Minister, Boris Johnson announced in a speech some great plans to help British people get in the housing ladder. Unfortunately this has been somewhat overshadowed by his subsequent resignation and the new Conservative Party leadership challenge, with Liz Truss being announced as the new leader on 5th September.
I want to have a look at some of the ideas and see if they could be a reality or if it was just political spin:
Homeownership
In his speech, the Prime Minister said: ‘The global rise in the cost of living is only making life harder for savers. So we want it to be easier to get a mortgage.’ He also confirmed his ambition to ‘unlock the opportunity of homeownership’ for more people through Right to Buy.
Mr Johnson also announced he was committed to helping those in a position to buy to access the mortgage finance they need, ensuring people are incentivised to save for a deposit no matter their financial situation, and improving the supply of housing across the country.
‘I want us to deliver on the long-standing commitment, made by several governments, to extend the right to buy to housing associations.’
‘Over the coming months, we will work with the sector to bring forward a new Right to Buy scheme. It will work for tenants, giving millions more the chance to own their home. It will work for taxpayers, responsibly capped at a level that is fully paid for, affordable within our existing spending plans and with one-for-one replacement of each social housing property sold.
So the right to buy scheme has been around for a long time, originally introduced under Margaret Thatcher’s government. As part of this he said that for each house sold a new one would be built. A very bold claim and in my opinion pretty hard to do given we are years behind in keeping up with demand now. The scheme extension is to open up the option to buy for those renting from housing associations, this is around 2.5 million people. As yet we have seen no plans as to how this will work.
Mortgage market
‘So today I can announce a comprehensive review of the mortgage market. Reporting back this autumn, it will look at how we can give our nation of aspiring homeowners better access to low-deposit mortgages, and what our own mortgage industry can learn from counterparts around the world who have all kinds of alternative ways of offering finance, managing risk and unbolting the door to ownership,’ said the Prime Minister.
The lower deposit mortgages soundbite is interesting as these have been around for a while except that they all went when lockdown came in back in 2020. a handful of lenders have come back into the 95% mortgage market but it is not back where it was.
Housing shortages
These measures are designed to help more people onto the property ladder and to address the issue of housing shortages in the UK. This comes after the proportion of 25 to 34-year-olds who own their own homes fell from 55% to 34% between 1996 and 2016[1].
The government is confident that these measures will make a significant difference to those looking to get on the property ladder for the first time, and will help to address the issue of housing affordability in the UK.
As ever it is a case of wait and see. Now that we have a new leader and new cabinet in place will they have the same priorities? With the cost of living ever increasing will Liz Truss focus on short term political gains or look long term?
Ready to discuss your mortgage options
Excited about starting the next big chapter in your life? If you are ready to discuss your mortgage options, we’re here to help – to find out more, contact The Surrey Mortgage Broker – telephone 01252 759233 – email richard@thesurreymortgagebroker.co.uk
Source data: [1] https://ifs.org.uk/uploads/publications/bns/BN224.pdf
