Boris Johnson aims to revive Thatcher’s ‘property owning democracy’ dream

Ever since Margaret Thatcher declared her belief in a ‘property-owning democracy’ and introduced Right to Buy in 1980, the UK has been a nation obsessed with the idea of homeownership, and Boris Johnson knows it.

Margaret Thatcher

Johnson’s government is expected to unveil plans this week to help tens of thousands of young people onto the property ladder by introducing a new mortgage guarantee scheme.

Speaking over the weekend, the PM vowed to pave the way for the country’s generation of renters to become a generation of homeowners instead.

He said “Young people shouldn’t feel excluded from the chance of owning their own home”.

In a bid to create plenty more property owners, there will be a significant boost for first-time buyers in this 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 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.

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “Turning ‘generation rent’ into ‘generation buy’ has been a focus for Boris Johnson for a while so the return of 95% loan-to-value mortgages for first-time buyers doesn’t come as a complete surprise. This, coupled with the extension of the stamp duty holiday, will result in a Budget which is a real boost for buyers.

“It is positive news for first-time buyers, particularly as it is not restricted to new homes, although critics may argue that it will only aid house price inflation. But without such a scheme would developers be so keen to put spades in the ground? The supply of new housing is nowhere near where it needs to be to satisfy demand.”

Mortgages with 5% deposits have been stopped by most banks during the Covid pandemic.

Harris added: “For those with little in the way of deposit, finding a 95% LTV mortgage has been pretty much impossible in recent months.”

Mark Hayward, chief policy adviser, Propertymark, commented: “A government backed mortgage guarantee scheme will help first time buyers get on the housing ladder at a time when for many owning a home seems an impossible dream.

“Alongside the potential extension of the stamp duty holiday that we have been calling for, this new scheme will go some way in giving some hope to first time buyers at a time when the size of deposits required means they fall at the first hurdle.”

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11 Comments

  1. AlwaysAnAgent

    For our sector, it’s hard to argue against anything that will introduce a steady flow of new buyers which this undoubtedly will.

    Don’t be fooled that Thatcher’s housing policies were helpful for everyone. The loss of council houses to right-to-buy was a disaster for the next generation of families who desperately needed social housing only to find that over a million houses had been sold off and not replaced. 55,000 affordable homes built last year and less than 10,000 of the cheapest type of social housing. It makes grim reading.

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    1. MarkJ

      I’d agree with that.

      Here in Wales the Council Property Right to Buy scheme ended in 2019 but it still seems to continue in England. From the gov.uk website:-

       

      “Houses

      You get a 35% discount if you’ve been a public sector tenant for between 3 and 5 years.

      After 5 years, the discount goes up by 1% for every extra year you’ve been a public sector tenant, up to a maximum of 70% – or £84,200 across England and £112,300 in London boroughs (whichever is lower).”

       

      So on a house a council tenant still gets a whopping 35% discount after only 3 years ….really?

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      1. CountryLass

        We have several large ex-council estates where I live, and it always irked me slightly that LR stats showed the purchase price when they bought it as around £20k, and they were quibbling over £500 on an offer when they were marketing it at £130kish, with no stamp duty as the property was excempt due to being ex-council estate…

         

        I don’t deny that giving long-term tenants the right to buy the property at a discount (taking the rent into consideration) is a good idea, IF there are replacement houses coming available. But 3 years is too soon for a 35% discount!

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  2. GWNB20

    You must also remember the Councils were greedy – none of them reinvested the monies received into building new Council housing but used the monies on other projects

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    1. Will2

      I seem to recall that councils could not re-invest into replacing sold off housing. Thatcher was a clever politician. I never disagreed that council tenants should have had a right to buy but the discounts were designed to buy votes and convert labour voters into Tory voters. The discounts should never have exceeded 10%.  Reinvestment should have been allowed into providing replacement social housing. Politicians are all the same and landlord bashing boris is playing to the many more tenants to buy their votes.

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  3. RosBeck73

    Apart from just stoking demand and providing no new housing, I find it ironic that this Government that has done so much to undermine the private property rights of landlords should harp on about a property-owning democracy.

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  4. AgencyInsider

    In just a relatively few years the Conservative government of Thatcher destroyed decades of stable property prices and borrowing costs, and a healthy level of social housing. Some got very rich from the changes. The majority are still suffering from the negative effects of her malign influence.

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    1. paulgbar666

      It was Gerymandering on a vast scale. Get people burdened with a mortgage and create a fearful workforce from going on strike. Those on welfare have nothing to fear as welfare pays all their bills. If a homeowner welfare is very limited.   Usually results in a lender repossessing. An issue that doesn’t affect tenants.   Social housing costs a fortune to build and maintain. Govt decided to give up and use HB to pay LL to house council tenants. But now the Tories DON’T want those LL but have failed to supply the social housing that is needed if LL aren’t wanted.   It is almost as though the Tories haven’t fully thought through their policies!!!

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  5. smile please

    Stop messing around, just bring back self-cert mortgages 🙂

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    1. paulgbar666

      Bit extreme. But IOM with MIRAS for FTB with NO repayment vehicle required with mortgage terms of 70 years not a problem. With only 5% deposit. That would enable FTB to more than compete with LL. I have no problem at all with all rental property converting to OO. Will never happen of course but a nice aspiration. LL of course have to find at least 25% deposit and even more when subject to PRA regulations. But as a basic principle I DON’T object to OO having more incentives than for BTL. Investing in property wealth is a good thing. That is why so many are LL! I suggest it should be made far easier for the average Joe to become an OO. So the MMR have to be abolished.       

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  6. northernlandlord

    Even if councils were able to use the Council house sale money to build new ones it would just not be economic as the sale will not finance building a new house. Instead most new housing is down to commercial home builders. 40% of the land they own goes undeveloped. They drip feed the market to keep prices up and maximise profits. For the same reason they don’t want to build “affordable” houses or develop brownfield sites. They also wriggle out of section 106 and Community Infrastructure Levies which are supposed to mitigate the effects their new houses will have on local infrastructure. In any event many of their houses are typically poorly constructed and have a predicted  lifetime of less than 50 years.

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