Young people should get government loans to pay for first house deposit, new report suggests

Housing and Finance Institute puts forward initiatives to increase number of homeowners

First-time buyers often struggle to get onto the housing ladder (Reuters)

Young people who are struggling to buy their first home should be given loans by the government for the deposit, a report said.

The Housing and Finance Institute (HFI) put forward initiatives to increase the number of homeowners by one million by 2035.

The organisation has suggested that the government cover the cost of a deposit and much like the student loan system, the money should be repaid as a proportion of the recipient’s salary.

Again, like the student loan system, the deposit loan would have a low interest rate, the repayment would only start above a certain salary threshold and it would be written off after 40 years.

Natalie Elphicke, chief executive of the HFI and a former adviser to the government on housing, told The Guardian: “The 15-year experiment of expanding the private rented sector on a huge scale has failed.

“It has left too many people facing exorbitant rents for poor-quality homes, with severe detrimental effects on their living standards and future opportunities. The evidence is compelling. It is time for a rethink.”

The report comes after it was announced that the number of new homes being built has dropped in the past year, despite Theresa May having made it her personal “mission” to oversee an increase in housebuilding.

Data released by the Ministry of Housing showed building work began on 157,480 new homes in 2017-18 – down from 163,000 the previous year.

Although the number of homes completed increased by 9,000 in the past year, the slowdown in new construction is likely to cause concern among ministers, who said they were “restless” to drive up building rates.