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House Purchase (First-Time Buyers)

Volume 934: debated on Wednesday 29 June 1977

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asked the Secretary of State for the Environment what is his policy on house purchase for first-time buyers.

I want to make it easier for people who wish to become home owners to do so. The Government's specific proposals include new savings bonus and loans schemes, as set out in Chapter 7 of the Green Paper on Housing Policy.

Is the right hon. Gentleman aware that no Minister before has ever felt it necessary to produce a Green Paper the day before answering a parliamentary Question of mine? Does he accept that, although one welcomes the proposals on low-start mortgages and longer-term mortgages, the real nub of the problem is the deposit? Is he satisfied that a maxmum loan of £500, which will carry interest after five years and a relatively small savings bonus, will be adequate? What consideration was given to the alternative proposal that to a couple who save £1,000 a grant of £500 will be given by the Government?

I personally rather agree with the hon. Gentleman that the deposit is the most important thing. It is not the only one, but it is for many people the major obstacle to starting on the journey of becoming home owners. Therefore, the proposals are designed to help overcome that hurdle. Whether a £500 loan linked to matching savings is insufficient, as opposed to a £500 grant linked, presumably, to an equivalent amount of savings—

But the individual has to do the saving and nothing in my scheme would prevent a person from saving £1,000. He could easily save £1,000 and would still attract a £500 loan. Thus, the difference between the two proposals is the difference between the £500 loan, the interest on which is cancelled for the first five years, and a £500 grant. Perhaps that is not as spectacular a difference as the hon. Gentleman has suggested.

May I direct the right hon. Gentleman's attention to the recent General Election in Southern Ireland, in which the Fianna Fail Party got into power after promising outright grants to first-time purchasers of as much as £1,000? Surely this country can at least offer £500 as an outright grant.

There will be time, as I said, to debate particular proposals. We have put forward what we believe will be a sufficiently attractive proposal to enable many people to overcome a serious hurdle. We obviously will consider the details of the scheme as we debate it in the House, but I must take account of many other claims on the housing budget generally.

Does not yesterday's Green Paper recommend the building societies to help first-time buyers, those who cannot raise the deposit, and those who want to get the cheaper, older houses? But have not the building societies, unlike local authorities, failed largely to do this? Will my right hon. Friend therefore require the building societies to make available part of their vast funds to the local authorities precisely for that purpose?

It would be helpful if the building societies could increase the amount which they make available to help would-be purchasers to overcome that obstacle. One looks upon this as a developing relationship among Government, building societies and local authorities. We have made a good deal of progress this year, but, like my hon. Friend, I am by no means satisfied. We shall keep in touch, together and with the building societies, to see what further needs to be done.

In welcoming the help which is to be given to first-time buyers, may I ask the right hon. Gentleman for an assurance that he has looked at the corollary of this situation and will make available an adequate supply of starter homes and extendable homes so as to help young married first-time buyers?

I am not certain about the particular categories that the hon. Gentleman has mentioned, other than the first-time buyer. It is the first-time buyer to whom this proposal is precisely directed.

In terms of encouraging building societies to join local authorities particularly to help the first-time buyer of older property, is my right hon. Friend aware that that has been done on South Tyneside, where some extremely valuable schemes in the inner areas are now in operation, with the co-operation of building societies and local authorities?

I am encouraged to hear that from my hon. Friend, because we have had many examples—I do not complain of them—of failure of co-operation. It is good to hear of cases where we are beginning to get what we very much wish to achieve, namely, effective co-operation between building societies and local authorities.

Will the right hon. Gentleman understand that one of the greatest harms done to the ability of people to buy low-price houses has been the dramatic reduction in the ceiling on local authority lending for that purpose, as imposed on the authorities by the Government? Bearing in mind the right hon. Gentleman's acceptance that it is often the deposit that presents a difficulty for first-time buyers, does he recognise that by putting forward a policy that will provide a loan and not a grant he is reducing effectively the creditability of the couple concerned, and that the money that he is making available will come off the mortgage that they can obtain from other sources? In fact, the scheme that the right hon. Gentleman announced yesterday is a con. The only way effectively to move forward in this area is to implement a one-to-two grants-to-savings scheme that will dramatically help people to get the deposit together.

It is obviously not a con; it is an effort to enable many of our fellow citizens who wish to become home owners to overcome a considerable obstacle. As for whether we have judged the terms of the scheme exactly right, we shall be interested to hear the views of the House in a considered way. The objective is to help. It is no good the hon. Gentleman brushing it aside. The real difference between a £500 interest-free loan for five years and a £500 grant is a good deal less than he is suggesting. As for damaging prospects by reducing local authority lending, the truth is that much local authority lending in the past has not been directed in precisely the way that we would have wished. I have been making every effort to get the building societies to fill the gap that we had to create in local authority lending last year.