Freedom to Buy | Labour’s Plan for First-Time Buyers
A recent report highlights a startling fact: nine out of ten first-time buyers (FTBs) are unaware of the current Mortgage Guarantee Scheme. This statistic comes from a study by Barratt Homes, which utilised data group OnePulse to survey 500 FTBs. It underscores the need for better awareness and understanding of available home ownership schemes.
Labour’s Proposed Changes
Labour Secures Landslide Victory: With all 650 seats declared, Keir Starmer has assumed office as the new prime minister, leading with a substantial Labour majority. Consequently, Labour plans to replace the existing Mortgage Guarantee Scheme with a new initiative called the Freedom to Buy programme. This programme aims to support 80,000 young people purchasing their first homes over the next five years. According to Labour’s manifesto, the party will introduce a permanent mortgage guarantee scheme to assist prospective homeowners who struggle to save for a significant deposit.
The present Mortgage Guarantee Scheme, set to end in June 2025, offers lenders financial guarantees. These guarantees cover 95% of a home loan, subject to affordability checks, on properties worth up to £600,000. Despite its benefits, the Barratt Homes report reveals that 88% of FTBs are unaware of this scheme. This lack of awareness may result in many missing out on potential advantages.
Other Affordable Home Ownership Schemes
Besides the Mortgage Guarantee Scheme, several other schemes exist to help FTBs:
Lifetime ISA: This scheme allows savers to pay up to £4,000 annually until age 50, with the government adding a 25% bonus, up to £1,000 per year. It can be used to purchase a first home or for later life savings.
Shared Ownership: This option lets borrowers buy a share of a home, ranging from 10% to 75% of its market value, while paying rent on the remaining share.
First Homes Scheme: This scheme offers homes at 30% to 50% below market value, available to FTBs for their sole or main residence.
Guarantor Mortgages: These mortgages use another person’s savings or property as collateral, providing a safety net for lenders and helping buyers secure a loan.
Future Prospects
Labour’s Freedom to Buy initiative is designed to increase the uptake of affordable housing schemes. The party plans to collaborate with lenders and the property industry to ensure the scheme’s success. Additionally, Labour aims to build 1.5 million homes over the next five years, further boosting housing availability.
Affordable home ownership schemes are crucial for FTBs entering the property market. The variety of schemes available allows buyers to choose the one that best fits their circumstances. Increased awareness and education about these options are essential to ensure that more individuals can benefit from these opportunities. As Labour proposes significant changes to current schemes, it remains to be seen how these will impact the housing market and FTBs in the future.
Why Contact Connect Expert Brokers
As a first-time buyer, you may be unsure of your budget and the available options. Connect Expert Brokers can guide you through this complex process. We ensure you have all the necessary information at hand.
As a whole market broker, we possess extensive knowledge of the latest schemes. This includes the proposed Freedom to Buy programme. Consequently, we can offer personalised advice and solutions tailored to your needs.
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