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FCA must help push development of ‘intergenerational mortgages’ – House of Lords

  • 25/04/2019
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FCA must help push development of ‘intergenerational mortgages’ – House of Lords
The regulator has a “key role to play” in pushing lenders to offer more innovative products which allow older family members to support their loved ones in accessing the housing market.


That is one of the conclusions of a new report from the House of Lords Select Committee on tackling intergenerational unfairness.

The report noted a “growing market” of intergenerational mortgage products, which were designed to address the difficulties young people face getting onto the housing ladder.

It cited evidence from Paul Broadhead, head of mortgage policy at the Building Societies Association, that the around a quarter of equity release deals were intended to help relatives to either buy or rent property, and called for the development of “innovative, flexible products which can help address this issue”.

It stated: “The Government and the Financial Conduct Authority have a key role to play in ensuring a regulatory framework that encourages new challenger entrants to these markets, who can shake up the existing playing field.”

The report also highlighted evidence from the industry that young people are being held back from accessing mortgages because of overly strict stress tests.


Addressing housing supply

The peers were withering about the government’s approach to improving the number of homes available, arguing action needs to be taken “to substantially increase the supply of social housing”.

It also pointed out that young generations will be helped by building more housing which is “accessible and adaptable for older generations”, making it more attractive for them to downsize.

In addition, the report warned that the government’s proposed reforms of the rental section do not provide tenants with the security they need.

“This particularly affects young people who are unable to buy and becomes a greater problem as they age. Change is needed so that renters who want a long-term secure tenancy can find one,” it concludes.


It is time to tackle stamp duty

Responding to the report, John Phillips, group operations director at Just Mortgages and Spicerhaart, said that stamp duty has “a lot to answer for”, arguing it is “long overdue a huge overhaul” which would help address some of the intergenerational unfairness.

“I supported the cut in stamp duty for first time buyers as it was a start, but said at the time, if you only help first time buyers, property prices will be forced up as sellers try and add the money ‘saved’ onto asking prices, to help them cover their own stamp duty costs. And this is what we have seen, to some extent,” he said.

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