Labour’s Freedom to Buy idea ‘won’t help FTBs’ says expert

Financial adviser Charlotte Nixon warns take-up of existing mortgage guarantee scheme is low and that new measures are needed.

Labour’s plan for a permanent Freedom to Buy mortgage guarantee scheme is unlikely to provide much extra help to first-time buyers, according to new data.

Figures just released show that since the launch of the current guarantee scheme in 2021, just 44,368 mortgages have been completed, of which 86% – or 38,323 – were for first-time buyers.

In contrast, new data unveiled by a Freedom of Information (FOI) request reveals that between 2021-2023, more than 1.13 million mortgages were secured by 18 to 30-year-olds.

The figures were revealed by Quilter, the wealth manager and financial adviser, which says that though well meaning, the current scheme – due to end in 2025 – has had very little impact.

Trending down

As a result, Labour’s bid to rebrand the mortgage guarantee scheme and make it permanent would not provide much additional help for first-time buyers, it argues.

Quilter’s analysis reveals the number of people between the ages of 18 and 30 securing a mortgage each year has risen relatively steadily in the last decade, reaching 350,092 in 2023 compared with 252,558 in 2014.

However, this number has been trending downwards since a spike of 401,665 in 2021 which aligned with the stamp duty holiday introduced during the pandemic, resulting in a 13% fall in just two years.

Alternative schemes

Quilter has assessed the impact of three key schemes which it says the Labour government could consider reinstating, adjusting, or taking inspiration from.

  • Help to Buy ISA: Since its launch on 1 December 2015, the Help to Buy ISA has supported 592,105 property completions.
  • Help to Buy equity loan scheme: In its 10 years of existence, the Help to Buy equity loan scheme supported a total of 387,195 property purchases.
  • Lifetime ISA: The Lifetime ISA was introduced in April 2017 and offers a 25% government bonus on savings of up to £4,000 per tax year. Since inception, the Lifetime ISA has been used for 171,050 house purchases.

“While it is certainly a good thing that more young people have been able secure a mortgage over the past decade, it appears the number may now be falling,” says Charlotte Nixon, mortgage expert at Quilter (main image).

Not the answer

“Given the current economic circumstances, young people’s finances are already incredibly stretched, so saving a deposit for a first home has been made all the more challenging.

“However, a high loan-to-value (LTV) mortgage such as those that would be encouraged by Labour’s Freedom to Buy scheme is simply not the answer.”

Nixon says such a scheme would not address the fundamental issue of high property prices relative to average incomes, evidenced by the lack of take-up.

“In the first instance, it will be imperative that Labour follows through on its commitment to increase housing supply, but even so this is unlikely to be enough to help those at the bottom of the chain,” she warned.

“The dawn of a new government provides the perfect opportunity to reassess the options currently available, as well as to invest time into consulting and planning to ensure that any new schemes brought to the table are as effective as possible.”


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