You often read that general election campaigns are – or at least should be – about policy, and from a housing/mortgage market perspective, we have now seen some of those policies included in the manifestos. 

 

All parties giving attention to homeownership 

For example, the Labour Party has announced its plans to make the government mortgage guarantee scheme for first-time buyers a permanent fixture of our market.  

As it stands, the current scheme is due to finish at the end of next June, but Labour will now turn this into a ‘Freedom to Buy’ scheme, designed to support 80,000 young people onto the ladder over the next five years.  

This will likely need significant enhancements to meet its goals, given it essentially serves as a government alternative to private mortgage insurance – used by many lenders, particularly building societies – to support high loan to value (LTV) mortgages.  

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Critics of the current state version often highlight its cost and lack of flexibility, suggesting it is vastly inferior to private alternatives with many lenders also preferring to manage these loans on their balance sheet without using insurance. 

Similarly, the Conservative Party has announced the ‘First Homes Scheme’, which plans to offer new houses to first-time buyers at a 30% discount from market value. This initiative aims to make homes more affordable, but the buyers will have to resell the homes at the same percentage below market value, ensuring ongoing affordability.  

Additionally, the Conservatives promise to deliver 300,000 homes annually and expand shared ownership options to facilitate access for first-time buyers. 

In Scotland, the Scottish National Party (SNP) is pushing for increased affordable housing and property tax reforms to assist first-time buyers. Its manifesto includes a ‘First-Time Buyer Savings Scheme’ where the government will match contributions up to a certain amount, encouraging young people to save for deposits. The SNP also plans to build at least 25,000 affordable homes each year, specifically earmarking many for first-time buyers, which could be a game changer in addressing housing affordability in Scotland. 

Meanwhile, the Liberal Democrats are advocating for a more innovative approach with a ‘Rent to Own’ scheme. This plan allows tenants to purchase their rented homes gradually, making the leap to homeownership more manageable. Additionally, a ‘Help to Renovate’ scheme could provide financial support for first-time buyers to renovate older properties, improving both home ownership rates and the quality of housing stock. 

Reform UK proposes a reduction in stamp duty for first-time buyers and is seeking to incentivise local councils to approve more residential developments. Its manifesto suggests scrapping stamp duty entirely on homes up to £500,000 for first-time buyers and simplifying planning permissions to boost house building.  

In Wales, Plaid Cymru is championing the ‘Help to Buy Cymru Plus’ scheme, designed to increase support for new-build purchases and fund more affordable homes.  

It is also proposing a land value tax to replace the current council tax system, which they believe will make property ownership more equitable and affordable for new buyers. 

 

Helping first-time buyers 

As we look at these policies, it’s evident the housing market – particularly for first-time buyers – remains a critical focus for all parties. However, without a concerted and focused housebuilding programme – for both owner-occupation and rental uses – supply is going to continue to lag behind the demand curve.  

The demand we see is simply not going to be met by supply alone. 

One further point to make ties into supporting first-time buyers while recognising that we are a long way from a ‘one size fits all’ need.  

Yes, first-timers require high LTV mortgages, and anything that improves the supply of these is to be welcomed. However, as many have pointed out, they still need to meet affordability criteria even if they have that 5% deposit saved. 

What we also need to focus on is affordability and recognising the different borrower demographics within the group of first-time buyers.  

For example, are they professional borrowers whose income is going to rise significantly in the years ahead, key workers for whom we have different product options, or joint borrower-sole proprietor arrangements with support from parents? 

These more specialist borrower types are increasingly becoming the norm in the first-time buyer space. As a lender, we are certainly committed to finding product ways and solution means by which they can get onto the housing ladder. 

To start, let’s present an optimistic future about what potential first-time buyers can achieve, and let’s hold the new government to account to ensure we have the property supply and product solutions available for all types of would-be purchasers who, for too long, have found the avenue to homeownership too difficult to navigate.