The Conservatives have launched a bid to help two million extra first time buyers onto the property ladder via a new type of ‘lifetime’ fixed-rate, 95% loan-to-value mortgage.
Launched to coincide with Labour’s manifesto launch, Boris Johnson says he wants to create a new market in long-term fixed-rate home loans funded in part by big pension funds looking for reliable sources of income.
“We are going to go out to the lenders, to the institutions and where you’ve got tenants who are paying substantial sums in rent every month but do not have the wherewithal for a really big deposit, we are going to help them to get the kind of mortgages they need,” Johnson told The Times.
These mortgages would be also be available for tenants wishing to buy their rented homes off their landlords, although the scheme sounds similar to Labour’s private rented sector ‘right to buy’ policy which it quietly dropped earlier this week.
It is also not clear how landlords would be persuaded to sell up to their tenants, although in the past it has been suggested that they could be arm-twisted to do so if Capital Gains Tax were reduced or suspended.
Boris Johnson also says homebuyers will be offered a 30% discount when buying new homes locally. This will be funded by developers, although he doesn’t explain how, given the thin margins most developers already operate on, this will be achieved.
Johnson says the discount would be locked in. This means the houses would, in effect, be permanently removed from the wider property market and only be available to people who live locally.
“These schemes have not been successful in the past because local people have used the discount and then sold them on so we will now entail the property so it has to be sold to someone from the same area,” he said.