The government is considering allowing renters to buy their first homes with just one per cent deposits, according to press reports over the weekend.
The Independent online newspaper claims that the government is considering the scheme as a radical variation of the previous Help to Buy scheme, which saw some buyers able to purchase new build houses with only five per cent deposits.
Banks and building societies would have their mortgages - possibly up to 99 per cent of the property value - guaranteed by the government, according to weekend reports.
However there remains scant detail about the idea, with no reference as to how this would help first time buyers pass payment affordability tests, even if they could afford the drastically reduced deposits required.
The house building industry has backed the idea, saying it can’t build more homes - and this boost supply - unless more people can actually be able to purchase them.
Labour deputy leader and shadow housing secretary Angela Rayner was quoted in the Independent saying the idea “completely failed to address the supply of affordable homes, or lift a finger to reform our broken planning system which has forced a generation of young people to give up on the dream of home ownership.”
And an unnamed senior Labour figure told the paper: “The truth of this issue is that you can’t have a serious housing policy without a real plan to drive up supply.”
The Liberal Democrats also spoke against the idea, claiming it was ironic that the party responsible for higher mortgage rates - as a result of the Liz Truss premiership - now wanted first time buyers to have 99 per cent mortgages.
Almost immediately after the main story appeared online it was the subject of criticism by a leading activist in the Generation Rent group.
From his personal X/Twitter account, group deputy chief executive Dan Wilson Craw posted his view of the idea: “So risky - extra demand could fuel price increases that lock even more renters out of ownership, or leave borrowers vulnerable to negative equity at the slightest dip in the housing market. Maybe they should get some housebuilding targets in place before playing with fire.”
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