Home Ownership: First-Time Buyers

Question

Asked by

To ask His Majesty’s Government what plans they have to promote home ownership for first-time buyers.

My Lords, we are increasing housing supply across all tenures to improve affordability for young people. Our ultimate objective is to help more people get the keys to their first home, increasing the overall home ownership rate. We support first-time buyers through government-backed schemes, including shared ownership, and the Treasury will shortly consult on a replacement for the lifetime ISA. Following FCA clarification, most buyers can borrow around 10% more, and this year we will publish a home-buying and selling reform road map, which is expected to save buyers £180 million a year and shave a month off transactions.

I am grateful to the Minister for that reply. Recently, the Prime Minister said:

“For my family growing up, the roof over our heads was everything. But for so many families today, homeownership is a distant dream. My government will make it a reality once again”.

For millions of people renting or living with their parents, it remains a dream. Many of them could actually afford the mortgage repayments, but without access to generous relatives, they cannot afford the deposit. Back in January, when I asked the Minister about hope for first-time buyers, she said:

“A great deal of work is going on in my department and with financial institutions to make sure that we make this process work for first-time buyers and others in the housing market”.—[Official Report, 8/1/26; col. 1314.]

Should there not now be a fresh initiative to deliver the Prime Minister’s promise?

The noble Lord will not be surprised to know that I always agree with my right honourable friend the Prime Minister. Of course I also welcome the HCLG Select Committee’s work, which has particularly looked at the types of inequalities that the noble Lord highlights. Three in 10 people get help from family or parents and, increasingly, access is being determined by family wealth, not earnings. We are working hard on this. From speaking to lenders, we know that many first-time buyers are not aware of all the innovative mortgage products and recent mortgage reforms that may help them get on the housing ladder. We speak regularly to lenders on how to raise awareness of different options among first-time buyers, including hosting two major industry round tables last year, both of which were covered in the mainstream media. Of course, there is more work to do, and the Government are keen for all stakeholders who work with potential first-time buyers, including estate agents and brokers, to play their part in helping them understand their options.

My Lords, I will follow up the important points that the noble Lord made. Home ownership makes up 62% of housing tenure, and getting first-time buyers to their first house is crucial, but social housing also plays a really important part in helping people to get into a decent, secure and affordable home. It is known that local authority social housing aids social mobility. Can the Minister therefore explain further the contribution of all tenures, particularly social housing, in getting people access to the home they want at a price they can afford in an area where they want to live?

Social and affordable housing sit side by side. We have confirmed a new 10-year £39 billion social and affordable homes programme to kick-start social and affordable housebuilding at scale across the country. Our ambition is to deliver around 300,000 homes over the programme’s lifetime. At least 60% of the homes delivered will be for social rent, with the remainder available for other tenures, including shared ownership, affordable rent and intermediate rent in London. This programme is active now. The councils and housing associations are bidding into that programme, as are other bidders, and I hope we will be able to deliver at pace very quickly.

My Lords, will the Minister agree that it is the longer-term effect of having fewer first-time buyers that really counts? When you retire as a tenant, you have not paid off a mortgage, you have not got a capital asset and you see your rent rising every year but your income falling. It catches up with you on retirement. In that longer-term perspective, I ask the Minister: what has happened to the Government’s long-term national housing strategy, which she promised me on 11 February would be out by 31 March? Is this on the way, and will it include a good chunk on how to bolster the number of first-time buyers, which is so important?

The noble Lord is quite right to say that, where people are not able to buy their own homes, this can lead to problems later on where people on fixed incomes later in life are on rapidly increasing rent. So it is very important that we try to encourage as many young people as possible who are able to buy property to carry on doing so. On his point about the long-term housing strategy, it is on its way. We said we would publish in the spring, and spring is not quite over yet. I hope we will be able to deliver it very soon.

My Lords, does the Minister agree that a strong mix across all tenures creates a healthy market for first-time buyers? Does she therefore share our disappointment on these Benches that fewer than 15,000 social rent completions were achieved last year? Does she accept that that leads to first-time buyers having to achieve an almost impossible deposit of over £60,000, and that they will continue to be squeezed out of the market until the mix of tenures is much healthier?

I hope I set out in my earlier answer the importance we place on the mix of tenures. The £39 billion programme to increase the provision of social and affordable homes is designed to do exactly that. We are taking measures, particularly confidence measures for consumers, to help some of our young people to understand this. Probably two generations now have been told that house buying is out of reach, so, when I work with the financial institutions, which we have been talking to very closely, we are keen that they promote better some of the mortgage options that are available.

My Lords, does the Minister recognise that freezing tax bands makes it much more difficult for those in work and those striving to earn money to get to that £60,000? That is the problem in my view.

I can only repeat what I said: it is very important that we encourage our young people, and others looking to buy homes, to consider the wide range of options that are available. I mention two particular institutions that I have been talking to, Lloyds and Santander, which are already going out there with very extensive campaigns. I encourage anybody who is keen to buy a house to go and talk to a broker or lender, because there are options available for people.

My Lords, I am very glad that the Minister has mentioned shared ownership schemes, because the terms for new schemes are really very good, but many people are stuck on previous detrimental schemes. Following Grenfell and the requirements for them to pay for upgrading, they are absolutely stuck in their homes. Will the Minister say what she is going to do about that, so that people can move into homes where they can have families, because these are often one-bedroom flats? Secondly, will she consider asking the Government to increase the rent a room scheme allocation so that people whose mortgages are going up and are renting out a room can be to some extent compensated to stay in their current homes?

Shared ownership has a very important role to play in supporting households into home ownership that would otherwise struggle to purchase a property on the open market that meets their needs. We are aware, of course, that some people who have entered shared ownership have faced challenges. I thank the noble Lord, Lord Young, for his work during the passage of the Renters’ Rights Bill to introduce the measures to help with that. We have introduced new expectations for landlords to improve the customer experience. These include giving greater consideration to long-term customer affordability and increasing transparency and fairness on costs. Shared owners will also benefit from the wider leasehold and commonhold reforms in a variety ways. We will debate the commonhold and leasehold reform Bill in due course—but the Act of 2024 grants shared owners the right to statutory lease extensions and makes it easier for them to challenge unreasonable service charges.

My Lords, stamp duty is a huge drag on those wishing to have their own home. In London, for the average first-time buyer, stamp duty is £15,000—a huge sum for those seeking to get a deposit. It also makes climbing the housing ladder extortionately expensive and prevents those wanting to downsize, thereby freeing up family homes, from being able to afford to do so. Does the Minister recognise that stamp duty is a bad tax, and it should be abolished so that people can afford to buy and to move?

That is a bit rich coming from someone who was in the government party for the past 14 years. First-time buyers benefit from paying no stamp duty on up to £300,000, and they can claim relief on purchases up to £500,000.