Brokers discuss the Chancellor of the Exchequer latest support package
Jeremy Hunt, Chancellor of the Exchequer, in preparation for the upcoming autumn statement, has worked on a comprehensive support package tailored to assist first-time buyers (FTBs) in their quest to step onto the property ladder.
Among the options under consideration are the extension of the government’s mortgage guarantee scheme and the introduction of an individual savings account (ISA), designed specifically for individuals aiming to accumulate a deposit for their first home purchase.
So, what are brokers’ views on the Chancellor of the Exchequer’s plans?
Gareth Davies (pictured), director at South Coast Mortgage Services, raised a critical question regarding the proliferation of various ISAs targeted at facilitating homeownership. He referenced, too, Skipton Building Society, which recently launched a 100% loan-to-value (LTV) track record mortgage, which aimed to help renters get on the property ladder without the need for a deposit.
“In my view, the need for innovative ideas is paramount, such as Skipton's approach earlier in the year, though arguably a marketing ploy, had the right idea with a 100% track record offering,” he said.
Davies added that with some refinement, such initiatives could address the genuine needs of first-time buyers.
Michelle Lawson, director at Lawson Financial, expressed reservations about the potential complications arising from the introduction of additional savings schemes.
To her, simplicity and clarity are imperative, and she noted that the existing landscape, which includes options like the Lifetime ISA (LISA) and Help to Buy ISA, is already intricate enough.
“I am sceptical about the effectiveness of new schemes, and fear that they might confuse first-time buyers who seek the best possible option for their circumstances,” she said.
Martin O'Callaghan, head of marketing at HLPartnership, provided a broader perspective, emphasising that a thriving housing market hinges on robust support for first-time buyers.
Acknowledging the challenges posed by rising property prices and economic pressures, O'Callaghan contended that homeownership transcends mere financial investment.
“It fosters community, provides stability, and facilitates generational wealth transfer, all contributing to a sustainable economy,” he said.
In order to address these multifaceted issues, O'Callaghan proposed a three-pronged strategy.
“Firstly, financial education, equipping the youth with knowledge about the housing market; secondly, government incentives, offering incentives to ease the buying process; and lastly, innovative housing, exploring affordable and sustainable housing models,” he said.
O'Callaghan underscored that government support for the first-time buyer market is crucial to prevent potential problems in the future.
Meanwhile, Jonathan Burridge, founding adviser at We Are Money, injected a dose of scepticism into the conversation, criticising what he perceived as the recycling of old ideas in new packaging.
Burridge advocated for a departure from traditional approaches, blaming Help to Buy (HTB) and buy-to-let (BTL) schemes, along with artificially low interest rates, for contributing to the rampant property price inflation that exacerbates the challenge of ownership.
“I propose solutions, such as a new home scheme with restrictive covenants preventing future letting and limiting ownership to first-time buyers,” he said.
Burridge suggested considering a Capital Gains Tax (CGT) moratorium or reduction for landlords selling properties to first-time buyers and imposing restrictions on sales to UK residents.
“Additionally, a greater focus on more affordable housing options beyond just one or two-bedroom flats is needed,” he said.
While cautious about presenting these ideas as definitive answers, Burridge underscored the importance of fostering creativity to address contemporary challenges, rather than repackaging outdated strategies.
Do you believe Jeremy Hunt's initiative will truly benefit first-time buyers? Let us know in the comment section below.
