Finance News,Tenant News

‘We will help turn generation rent into generation buy’ says PM

Em Morley - October 7, 2020

In yesterday’s speech, Prime Minister Boris Johnson announced plans for 95% home mortgage loans for young, first-time buyers to ‘help turn generation rent into generation buy’.

Mark Hayward, Chief Executive of NAEA Propertymark, comments: “We welcome the Prime Minister’s comments today which shows a positive change in tone by promoting a generation of renters to become a generation of buyers. We encourage lenders to come on board and support this initiative to enable first time buyers to enter the property market by future proofing the financial burden many face.”

“We want to see intent become action quickly so that first time buyers can make the most of the current stamp duty holiday and continue to stimulate the housing market.” 

James Forrester, Managing Director of Barrows and Forrester, comments: Today’s (6th October) announcement will no doubt excite a nation of aspirational homebuyers who have already been sent into a frenzy over the prospect of paying no stamp duty. 

“However, for Boris Johnson to claim this will help fix our broken housing market is not only laughable but quite frankly an insult to those who find themselves priced out of homeownership.

“The cause of the dire situation we find ourselves in is the Government’s sustained failure to build enough affordable housing year in, year out.  

“The inadequate supply of housing to meet demand is one of the driving factors that has caused house prices to spiral and to continue to mask this failure by further fuelling demand is irresponsible.

“Instead, their time would be better spent reallocating wrongly classified green belt land so it can be utilised for housing and preventing the big housebuilders from drip-feeding housing supply in order to keep their profits up.”

Marc von Grundherr, Director of Benham and Reeves, comments: “Creating two million more homeowners is a lovely bit of rhetoric for Boris to fuel market sentiment, but it comes with a clear and obvious problem. Where are they going to live? 

“Yes, the affordability of homeownership is a problem at present and providing buyers with a foot up via a smaller deposit will help many to overcome this hurdle. In the more inflated markets such as London, it reduces the deposit required by some £25,000 and so the initial saving is notable.  

“However, we’re simply not building enough homes and the Government’s head in the sand approach to this burning issue is going to bring about problems when those securing these new mortgages actually look for a home. 

“Unless we address this, we will see house prices continue to climb ever higher as a result of this new initiative, to the detriment of those it’s ironically supposed to help.”

Islay Robinson, Group CEO of Enness Global Mortgages, comments: “While the UK is facing tough economic times this further boost to homebuyer demand should ensure that activity remains strong and house price growth remains buoyant.  

“This will not only maintain the health of the regular market but it will also cause a ripple effect that will benefit sellers across the board, even at higher price tiers. 

“The UK and London, in particular, remains the pinnacle of homeownership for many high-end international buyers. While this demand has been stifled due to Brexit and the restrictions of the current pandemic, we’ve seen international buyers return as confidence has built in the core segment of the market.  

“Ensuring this activity remains strong and prices continue to increase will bring further interest from foreign shores and this will help boost the UK economy on a number of fronts, not just through healthy property price growth.”

Craig McKinlay, New Business Director at Kensington Mortgages, comments: “The ‘Generation Buy’ scheme will be, in effect, a replacement for Help to Buy. Only a few lenders are dipping in and out of the high LTV market at present with ‘flash sales’ due to sheer demand – so this should reassure some lenders to enter more permanently and support first-time buyers. 

“However, for others, the scheme could lead to further capacity issues for those being selective with their offering to manage demand. On the whole though, like the introduction of Help to Buy in 2013 helped boost confidence and ease lenders back into the small deposit market, we hope this scheme will do the same.”