When Karen and I bought our first home, you didn’t have to find a huge deposit - about £4,000 if I remember correctly; still a lot of money, but nothing like what people have to pay today. Since the banking crisis that happened on Labour’s watch, banks have been asking for 20% deposits. With rents in the private sector so high, it’s virtually impossible to find the money required unless your parents can afford to help you or you stay living with them into your 30s (which, however close you are, isn’t a great arrangement for either party!) Take a couple both of whom earn about £25,000 before tax, which is about average: if they want to buy a £200,000 house, they’re going to have to pay a £40,000 deposit. How are they meant to find that sort of money?
Conservatives have always been the party of home ownership from Harold MacMillan’s Government’s huge house-building programme to Margaret Thatcher’s Government giving council tenants the Right to Buy. We can’t stand by and watch a generation of young people who could afford a monthly mortgage payment unable to realise their dream because they can’t afford a deposit of this size. Home ownership is what most people aspire to, it spreads wealth more widely in society, it’s good for local communities to have people with a long-term stake in the area and it’s even good for those who can’t afford to own because higher home ownership means less demand in the private rented sector, which should hold down rents.
So it’s great to hear that the Government’s new Help to Buy scheme, which provides a guarantee to lenders enabling them to offer mortgages with lower deposits, will now start next week rather next year as originally planned.
There are some people - generally people who already own their own home - who say we shouldn’t be doing this, that we should just leave it to the market. Of course, we must avoid repeating the mistakes of the past and stoking up another housing bubble, but this isn’t about allowing people to borrow many times their salary: it’s simply about helping to make deposits more affordable and making sure it’s not just the privileged in society who in future get to own their own home.