Industry Experts At National Law Firm Advise Caution
Two million prospective buyers could take their first step on the housing ladder after the Prime Minister announced his ‘Generation Buy’ scheme.
News broke earlier this week that a proposed plan will allow first-time buyers to purchase homes with just a 5% deposit needed, in a move Prime Minister Boris Johnson said would turn ‘Generation Rent into Generation Buy’.
The plan would see planning permissions made easier to build new homes as well as long-term, fixed-rate mortgage options, but failed to offer any real detail on how these would work.
Housebuilding shares jumped at the announcement; four of the biggest housing developers were the fastest-rising share prices on the FTSE 100 immediately afterwards. The banking sector’s reaction was much cooler – understandably so, given the 2008 financial crash being caused by overextending loans on housing.
Residential property experts at leading national law firm Irwin Mitchell urge caution with the proposals, suggesting the focus should be elsewhere in the market.
Expert Opinion“Government efforts would be better spent ensuring that more new homes are actually built where they are needed, and in affordable price ranges.
“At this point the most likely source of relief on that front is via local authorities and housing associations. We already have a large number of households – frequently young people - trapped in unsuitable homes due to the cladding scandal; unable to sell or even to sublet.
“Younger homeowners are generally likely to need to move again in the relatively near future. Given the huge economic uncertainties currently faced by the whole country, encouraging young people to buy with levels of debt that could easily result in negative equity within a short period, does not seem particularly sensible.
“This is a group that needs a full understanding of the potential dangers ahead, rather than false hope and a high-risk start to their lives on the property ladder.” Jeremy Raj - Partner