Johnson also spoke about his plan to offer 95 per cent loan to value (LTV) mortgages to help first-time buyers but revealed no new details about the policy, which has since received further criticism.
During his speech, Johnson said: “Millions of people are forced to pay through the nose to rent a home they cannot truly love or make their own, because they cannot add a knob or a knocker to the front door or in some cases even hang a picture – let alone pass it on to their children.”
‘Prime minister is wrong’
This was disputed by the National Residential Landlords Association (NRLA) which said a previous survey it conducted found 63 per cent of renters had redecorated their home and 52 per cent had made significant changes to their gardens with the permission of their landlord.
NRLA policy director Chris Norris said: “While we believe that those who want to should have the opportunity to buy a home of their own, the prime minister is wrong to imply that renters cannot turn the properties they live in into a home of their own.
“Indeed, landlords much prefer to have tenants settled long term in a home they feel comfortable in and want to look after.
“If the government really wants to support homeownership it should consider changes to the tax system to support and encourage landlords considering leaving the market to sell to first-time buyers.
“Reports that ministers are considering an increase in Capital Gains Tax would serve only to incentivise landlords to hold on to properties longer than they might otherwise have done,” he added.
Reintroduce guarantee scheme
Johnson continued his speech saying: “We need now to take forward one of the key proposals of our manifesto of 2019 – giving young first-time buyers the chance to take out a long-term fixed rate mortgage of up to 95 per cent of the value of the home, vastly reducing the size of the deposit, and giving the chance of home ownership – and all the joy and pride that goes with it – to millions that feel excluded.”
Yesterday Mortgage Solutions reported that brokers gave the policy a lukewarm reception.
And while other members of the mortgage industry appreciated the intention to enable more first-time buyers to purchase a property, they have suggested better options could be found.
Just Mortgages national operations manager John Phillips, argued that guaranteeing high LTV mortgages with taxpayer money was not right with the national debt growing rapidly.
Instead he suggested the reintroduction of a mortgage indemnity guarantee (MIG) scheme.
“These were widespread up until the year 2000. Paid by the borrower the MIG protected the lender against loss in the event of the borrower stopping paying their mortgage,” he said.
“While some considered it unfair that the borrower paid the insurance premium it did ultimately benefit the borrower as it ensured a large number of high LTV mortgages.
“If the government really does want to bring back high LTV mortgages this has to be the way forwards as mortgages guaranteed by the taxpayer are clearly not sustainable at a time when government borrowing has now exceeded our annual GDP.”
Reallymoving CEO Rob Houghton echoed the concerns and risks of high LTV lending.
“The Mortgage Market Review, which came into force after the credit crunch, remains in place to protect buyers from the kind of irresponsible lending practices we’ve seen in the past,” he added.
Tackle long-term failures
Audley Group CEO Nick Sanderson argued that government should be tackling the long-term failures in the country’s housing provision and where there is a severe under-supply.
“Renewing the focus on building more homes and turning generation rent into generation buy is wrong,” he said.
“It was wrong before, and is wrong again now. We have enough houses, but they are under-occupied: a report from City Business School found that we will have 20 million surplus bedrooms in this country by 2040, many in houses owned by people who would like to downsize.”
However, NAEA Propertymark chief executive Mark Hayward supported the proposals.
“We welcome the prime minister’s comments today which shows a positive change in tone by promoting a generation of renters to become a generation of buyers,” he said.
“We encourage lenders to come on board and support this initiative to enable first time buyers to enter the property market by future proofing the financial burden many face.”
