Boris Johnson has promised to create 2 million more owner-occupiers by introducing 5 per cent mortgage deposits for first-time buyers to transform “generation rent” into “generation buy”.
The pledge was one of a series of ambitious promises in the prime minister’s speech to the annual Conservative conference, also including a massive increase in wind power, one-to-one tuition in schools and reform of social care.
In a speech delivered virtually and with no audience, Mr Johnson dismissed suggestions that he was suffering from the after-effects of Covid as “seditious propaganda”, but admitted he had been badly hit by the illness because he was “too fat”.
Mr Johnson said that it was “disgraceful” that levels of homeownership among under-40s had plummeted over recent years, forcing millions of people to “pay through the nose to rent a home which they can’t truly love or make their own”.
He said that he wanted to “fix our broken housing market” not only by building more homes but by making mortgages more affordable, with long-term fixed-rate deals available on a 5 per cent deposit for first-time buyers.
He said this would “give the chance of homeownership and all the joy and the pride that goes with it to millions who currently feel excluded”.
Mr Johnson said that the policy could create 2 million more owner-occupiers in “the biggest expansion of homeownership since the 1980s”.
“We will help turn generation rent into generation buy,” he said.
“We will fix the long-term problems of this country not by endlessly expanding the state but by giving power back to people – the fundamental life-affirming power of homeownership.”
A move to 5 per cent deposits is likely to require change to regulations introduced in the wake of the 2008 crash to take risk out of the financial system.
Strict minimum capital requirements imposed on UK banks have been blamed for making homeownership unattainable for many individuals and couples whose income would allow them to afford repayments on a mortgage but who cannot save enough to put down a 15 or 20 per cent deposit running into five figures.
Risky lending in the 2000s was blamed for contributing to the collapse of a number of financial institutions that offered mortgages on tiny deposits or even loans larger than the value of the property being purchased.
Partly as a result, the number of households in the private rented sector in the UK increased from 2.8 million in 2007 to 4.5 million in 2017.
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