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Home-ownership Rates

Volume 834: debated on Wednesday 6 December 2023


Asked by

To ask His Majesty’s Government what proposals they have to reverse the trend of falling rates of owner-occupation among the 25-34 age group.

My Lords, the Government have a range of schemes to help people into home ownership, including First Homes, shared ownership and the mortgage guarantee scheme. We have raised stamp duty thresholds so that, for properties up to £425,000, first-time buyers pay no stamp duty and, for properties up to £625,000, they pay only 5% on the amount above the £425,000 threshold. We remain committed to making home ownership a reality for as many young people as possible.

I thank my noble friend for the Answer but, frankly, it is not working, is it? If home ownership is so fundamental to this age group, surely we should be more generous. First, we should remove stamp duty. Secondly, there should be a savings scheme so that people can save for a proper deposit in relation to the market price level. Thirdly, tax relief should be what it used to be, when I and others in this House bought our first houses, on the whole of the mortgage. Finally—I am quite prepared to help my noble friend on this—let us approach the mortgage lenders so that, when somebody starts on a mortgage, there is a discount from the mortgage lender in the first few years.

My noble friend puts forward a number of approaches to tackling this problem. I agree on a great many of them; that is why, as I pointed out in my Answer, we have cut stamp duty for first-time buyers. We also have a savings scheme in place to help people with their deposits, because we know that is another barrier. The lifetime ISA applies a 25% government bonus to the savings that people put into that scheme. As for working with mortgage lenders, we have the mortgage guarantee scheme, which looks to expand the availability of 95% mortgages in the market, and we have worked closely with lenders in the current market to ensure that those who struggle to pay their mortgages are properly supported.

My Lords, by abandoning the housing targets, the Government have made home ownership for young people an ever more distant dream. Hard-working young people are increasingly priced out of their areas, squeezed by rents and having their ambition to buy a house taken from them. Can I urge the Minister to reinstate housebuilding targets and to consider a new, more comprehensive mortgage guarantee scheme?

My Lords, since 2010, more than 2.5 million additional homes have been delivered and, since 2018, we have had four of the highest annual rates of housing supply of the last 30 years. We are building more homes, because increasing supply is fundamental to helping more people on to the housing ladder—but there is more to do. We have our new affordable homes programme, which will deliver even more affordable homes to buy and for rent to help people on to the housing ladder.

My Lords, further to my noble friend Lord Naseby’s Question, I point out that average house prices in London are now 13 times average earnings, and multiples have gone up throughout the country. As a result, many people have to rent, even though they would prefer to be home buyers, because they cannot afford the deposit. Many now pay more in rent than they would on a mortgage. Therefore, in addition to the schemes mentioned by my noble friend the Minister, do we not need some more ambitious schemes to enable more of these people to achieve their ambition of home ownership?

My Lords, the Government completely recognise the issue that my noble friend has set out. The mortgage guarantee scheme is relatively new; it opened in April 2021 and was recently extended to June 2025. It extends the availability of 95% mortgages, which helps with that deposit issue because it reduces the amount that people need to save for their deposits. More than 39,000 households have been helped through that scheme already, and I expect many more to be helped in future. To give a sense of scale on the lifetime ISA and its predecessor—the Help to Buy ISA, our other main scheme to help with saving for deposits—I say that under the Help to Buy ISA we supported over 550,000 property completions, so these are not insignificant support schemes to help people in these areas.

My Lords, in cities such as mine of Manchester and Salford, in terms of home ownership, many people in this age group aspire to an apartment yet, however many years we are on from the Grenfell fire disaster, too many properties still remain unmortgageable. I am grateful to the noble Lord, Lord Greenhalgh, for the support he has given to campaigners over the years, yet still people cannot get a property because they cannot get a mortgage on it. When will the Government put an end to this scandal?

Let me reassure the right reverend Prelate that we continue to make progress on the cladding issue. It has gone on for too long; we have made significant changes to the legislation and other measures to address it, and we will continue to work until everyone in that position has the resolution they need.

My Lords, shared ownership is promoted by the Government and is designed to be a pathway to getting a secure home and a foot on the property ladder. Does the Minister agree with me and the HomeOwners Alliance that this is proving a very complex and confusing financial model, with several significant drawbacks. The Government are increasing the funding for this type of tenure, but what are they doing to analyse these shortcomings, not only to quantify them but to rise to the challenge of meeting them so that more people can access a home through this method?

My Lords, the noble Baroness is right that shared ownership represents an important part of our affordable homes programme and is an important part of helping first-time buyers, particularly younger first-time buyers, on to the housing ladder. We conduct extensive evaluations of our affordable homes programme and will always seek to learn what we can do to improve those schemes, including the users’ experience of them and whether their complexity creates problems further down the line. We will always look at improving where we can.

My Lords, my noble friend Lord Naseby is undoubtedly right that the mortgage market is broken. Do we not also need fundamentally to look at the planning system as well as fiscal incentives via the Treasury, particularly for small and medium-sized builders that were wiped out in the financial crisis of 2008, so that urban extensions and new garden towns and villages can be delivered to provide much-needed residential accommodation for young working families and young people generally?

My noble friend is absolutely right that planning is key. Many measures in the Levelling-up and Regeneration Act are targeted at supporting the planning system. We also had announcements at the Autumn Statement about improving the efficiency of the planning system and putting more resources into it. My noble friend is also right about small and medium- sized builders; part of the key to supporting them is ensuring that, when we have more difficult market conditions, we continue that supply chain and increase supplies. For example, the affordable homes programme can provide an important role in making sure that builders do not go out of business in tougher conditions.

My Lords, in the longer term it would clearly make homes more affordable for first-time buyers if there were enough homes to go round and current acute shortages were eased. In the short term, does the noble Baroness agree that it is ridiculous that so many young people pay more in rent to private landlords than they would pay for a mortgage to secure a home of their own if only they could persuade the banks and building societies to lend more sensibly? If she agrees, will the Government look at extending the new and useful mortgage guarantee scheme to reassure lenders and at the DWP’s support for mortgage interest scheme, which needs to be a benefit and not a loan, to pick up those rare cases where there are serious arrears?

My Lords, I have good news for the noble Lord on the first point. The mortgage guarantee scheme has been extended to June 2025 to allow more 95% mortgages to be available to first-time buyers. We have also made changes on support for mortgage interest. Since April, we have allowed those on universal credit to apply for a support for mortgage interest loan after three months rather than nine. However, it is right that it remains a loan rather than a grant in these circumstances.

My Lords, may I finally get in with a question? The noble Lord, Lord Naseby, mentioned the benefit of complete full relief on all mortgage interest that many of us had when we were purchasing. Why cannot young people have that?

My Lords, we consider all different routes to supporting young people into the housing market. One drawback may be that support is less targeted at those who face the greatest affordability challenges when getting into the housing market. We have sought to refine in our programmes over the years where we can get the biggest impact for the investment that we are making on behalf of the taxpayer.