Removing Stamp Duty not the answer

Commenting, he said: “Removing stamp duty for first-time buyer properties is a welcome step in the right direction - but it doesn’t address the real issue for first-time buyers. First-timers simply can’t borrow enough cash to buy a home, and are having to save for up to 4 years longer.

“There are other options – options that would cost the Treasury less in lost revenue. For instance, if the state-backed banks were forced to provide products that take lodger income into account, the average first-time buyer could access an additional £11,000.

“Flatmate Mortgages would offer a vital lifeline to first-timers, without leaving the government out of pocket. It would kill two birds with one stone – providing a leg-up on the housing ladder as well as boosting the supply of affordable housing for young people by increasing the stock of flatshares. Not only will the extra cash help them buy their first property faster – they’ll be sharing the bills and living more cheaply a result.”

Someone earning the UK’s average salary, £26,000 can borrow between £47,600 and £65,400 (after non-housing related monthly outgoings). However, if lenders included the £4,392 yearly income an average homeowner could earn renting a room (approximately £365 per month), this could rise considerably. By allowing 2.5 times this income to be borrowed, Flatmate Mortgages would allow the average borrower access to an extra £11,000. It would take a young adult more than 4.5 years to save that amount in a deposit - even if they were squirreling a whopping £200 extra away every month.