There will be a major boost for first-time buyers in next week’s Budget with the return of 95% loan-to-value mortgages.
The new mortgage guarantee scheme designed to help first-time buyers with 5% deposits onto the housing ladder will be unveiled by Rishi Sunak on Wednesday.
The aim is to stimulate the housing market, get more younger people onto the housing ladder, and increase property transactions; good news for agents.
Mortgages with 5% deposits have been stopped by most banks during the Covid pandemic.
The chancellor plans to incentivise lenders to provide mortgages to first-time buyers, and existing homeowners, with just 5% deposits to purchase properties worth up to £600,000.
Sunak told the press: “Owning a home is a dream for millions and we want to help as many people as possible.”
Boris Johnson said he wants “generation rent” to become “generation buy”.
The prime minister commented: “Young people shouldn’t feel excluded from the chance of owning their own home and now it will be easier than ever to get onto the property ladder.”
Treasury officials are hopeful that the new scheme, which is a successor to the Help to Buy mortgage scheme introduced by David Cameron and George Osborne in 2013, will provide a major boost to the housing market.
The chancellor is also expected to use the Budget to announce that the stamp duty deadline of 31 March is to be extended until the end of June.
Stamp duty holiday to be extended – but will it create another cliff edge?
Anything that facilitates homeownership is a good thing. Govt needs to lock in homeowners with the burden of homeownership as it provides for a more compliant population. Renters have no stake in society and can choose to not pay rent knowing there will be little effects on them due to the completely dysfunctional eviction and civil recovery processes. Plus they know the State will cover the majority of their needs. In short it pays to be a feckless rent defaulting tenant. These feckless tenants are causing £9 billion of losses to LL and massive losses of tax that would have been paid by LL on that defaulted rental income. Far better to persuade the feckless to become homeowners where they won’t have the luxury of being feckless. Being a homeowner ensures that people will work come what may to support the mortgage. There is now very reduced welfare support for homeowners. Of course Govt is also ensuring that in about 50 years there would be a vast amount of housing equity that Councils will be able to rob for care home fees. So this small amount of assistance for FTB will pay massive dividends in future. The concept of trapping a population into homeownership is politically very attractive in that it prevents a stroppy population from acting up. They will all be trapped by mortgage payments. Homeownership makes for an excellent prison. Govt needs to increase it’s tax take from LL which it can’t do with the billions of defaulted rent. Of course Govt could ensure that LL were best able to receive rent which can then be taxed but that would mean Govt making eviction for rent defaulting immediate. No sign that Govt will do thay. Indeed they are engaged in exactly the opposite!! But making renters homeowners is a great way for Govt to control a population and to save future Govt finances for care home fees. The average little person will only achieve housing equity. Wages are only just about enough for normal living costs. Govt will need to be able to rob a pool of wealth for care home fees. Creating housing wealth by persuading people to become homeowners is the most effective way of achieving this.
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Boris has announced that he wants a Generation Buy not a Generation Rent. That tells you where his priorities lie.
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Personally I believe Generation Buy is a far better option for those who wish to be LL. Getting rid of resentful Generation Renters by converting them into Generation Buy is an admirable aspiration. This will hopefully result in fewer LL with a better and more profitable offer. We need the dross properties to be owned by Generation Buy. Let them have all the problems and costs of maintaining grotty properties. Even better that these grotty properties are removed from the PRS as very few of them can be made to economically compliant with EPC C status. GB won’t need to comply with ridiculous EPC C status requirements. Far better for the PRS to be a smaller; leaner and far more profitable sector. I welcome if possible every GR to GB if possible. Perhaps then GB can get on with the onerous tasks of paying a mortgage and managing their properties.
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Generation Rent, could easily find itself – Generation Negative Equity – if as has been predicted by some sources repossessions reach a level in excess of 20,000 by 2023. Also the inniative will only serve to inflate an already high market, out of kilter with a fundamentally flawed economy. Another quick sound bite that appeases the housing market, far better the Chancellor stops tinkering and starts some original thinking.
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Having property assets which reduce in value are a bit like shares that reduce in value. Only becomes a problem if wanting to sell when values have reduced. Providing you can hold such assets eventually original value restores. Might take a few years but as far as negative equity is concerned usually not a problem as few homeowners will sell for at least 5 years as an average of ownership periods.
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Having a property assets which reduce in value is a bit like shares that reduce in value.
Only becomes a problem if wanting to sell when values have reduced.
Providing you can hold such assets eventually original value restores.
Might take a few years but as far as negative equity is concerned usually not a problem as few homeowners will sell for at least 5 years as an average of ownership periods.
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