The Prime Minister’s promise to create two million more homeowners by introducing five per cent mortgage deposits for first-time buyers has been welcomed by the Land Promoters and Developers Federation (LPDF).
Boris Johnson yesterday reiterated his plans to continue with the introduction of long-term, fixed-rate mortgages with up to a 95% loan to value (LTV) ratio. If successful, the move would deliver the most significant expansion of homeownership in Britain for the last 30 years.
The LPDF who supports the government policy on housing and planning welcomed the plans to transform what it calls ‘Generation Rent’ into ‘Generation Buy’.
LPDF Chairman Paul Brocklehurst said: “We welcome the fact that Government appears to have responded positively to a number of initiatives, contained in our Building a Recovery paper, with proposals to tackle this injustice. Improved access to high loan to value mortgages, handled responsibly, has the potential to help hundreds of thousands of young people.”
In his press conference yesterday, the prime minister claimed he wants to “fix our broken housing market” by building more homes and making mortgages more affordable.
Boris Johnson said that he believed it was “disgraceful” that levels of homeownership among under-40s had plummeted over recent years, forcing millions of people to “pay through the nose to rent a home, which they can’t truly love or make their own”.
Mr Brocklehurst adds: “For some time now the LPDF has been calling for action to help young people become homeowners. In recent months their dreams of owning their own homes have been hit particularly badly as prices have risen sharply and mortgage lenders have begun to demand much higher deposits.”
In London, the average rental price within the private rental sector is £1,693, while in Wales the cost is just £654 per month, far lower than many mortgages cost in most parts of London and the South East.
House prices in London are also a cause for concern for many with several one-bedroom flats in desirable areas costing over £1million.
It remains to seen if Boris’ initiative can result in more affordable homes being built in the capital that are realistically affordable for young, first-time buyers.
Brocklehurst concludes: “Let us be in no doubt that there is a crisis. The average house price has increased by 550% in 35 years. The price of that average home is now in excess of eight times average salaries, effectively doubling over that period, and is considerably more in certain areas.
“The average age of first-time buyers has increased from 27 years to close to 35 years and, as a consequence, generations now feel they are excluded from owning their own home. This is yet another area of our society in which a generational injustice is manifesting itself.”