Boris Johnson has put even more backing behind homeownership today, leaving social housing further out in the cold.
Speaking at the virtual Conservative party conference, the prime minister said reform of mortgage market will spark “biggest expansion of home ownership since the 1980s”, pledging to get two million people on the housing ladder.
Johnson said the government was going to take forward its manifesto pledge to set up a market for long-term fixed-rate loans, which will require deposits of just 5%.
The policy is designed to tackle the difficulty that first-time buyers on ‘reliable incomes’ face in buying their first home due to the size of the deposit needed, with most mortgage lenders requiring a minimum 15% deposit.
Johnson said the policy will give young first-time buyers the opportunity to take out a long-term fixed rate mortgage of up to 95% of the value of the home, “vastly reducing” the size of the deposit and giving the chance of home ownership – “and all the joy and pride that goes with it” – to millions who feel excluded.
“We will help turn generation rent into generation buy,” Johnson said.
“We will fix the long-term problems of this country not by endlessly expanding the state, but by giving power back to people – the fundamental life-affirming power of home ownership.”
Yet, social housing was conspicuously absent from the prime minister’s speech.
The provisional plans and their lack of consideration toward social housing were already being criticised on the weekend, with Shelter CEO Polly Neate questioning if Johnson “is in touch with reality”, urging him to “stop selling pipedreams”.
The government is likely to use the policy to stimulate the housing market in the wake of the winding down of its Help to Buy policy, which is due to start in April next year.
The announcement comes as mortgage lenders have drastically reduced lending at high loan-to-value ratios due to the COVID-19 pandemic, with a 95% drop in the number of products available since the start of the outbreak.
It also comes amid rising fears that the strong recovery seen in the housing market since the lifting of lockdown measures is starting to wane in the face of deepening economic concerns.
In his speech, Johnson said the UK was and would be “the greatest place on Earth”, and that it was “the measure of the greatness of this country that we are simply not going to let [the pandemic] hold us back or slow us down”.
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