The Prime Minister Boris Johnson’s plans to offer the 2.5 million housing association tenants in the UK the right to buy their own homes at discounted rates has been met with approval from Britain’s mortgage lenders.
Currently, tenants in council homes are eligible to buy their homes at a discounted price, up to 70% off the market value, dependent on how long they have lived there.
The government now plans to extend this privilege to allow housing association tenants to become homeowners and “add value and make improvements” to their properties and turn “generation rent” into “generation buy”.
It has also added that it would conduct first comprehensive review of the mortgage market for a decade with an aim to require mortgage lenders to require smaller deposits from home buyers.
Charles Roe, director of mortgages at UK Finance the trade association for the UK banking and financial services sector, said: “The mortgage industry recognises the importance of homeownership and today’s announcements by the Prime Minister could help more people realise their dream of owning their own home.”
He said that banks and finance houses were “committed to lending responsibly” and that regulatory rules were in place to ensure that applicants did not overstretch their financial position and it was important that the industry carefully consider any changes and make sure they “deliver good outcomes” for customers throughout the life of a mortgage.
A statement from Nationwide, said: ”As one of the UK’s largest mortgage lenders, we look forward to understanding more about the government’s ambitious announcement to extend right to buy to help those on benefits buy their first home.”
However, Nationwide said that the Prime Minister would have to show willing that the sold housing stock “is replaced”.
A spokesperson for NatWest said: “We welcome all measures that encourage sustainable and affordable home ownership and will engage fully with the detail of these proposals.”
NatWest added that its affordability policies already enabled customers to use a “range of benefit income to support an application for a mortgage”.
“We are interested in hearing about all ideas aimed at making home ownership more accessible and affordable, particularly at a time when the cost of living continues to rise,” the bank added.
In a statement HSBC, said that it already accepted Universal Credit, disability benefits and other payments as part of an affordability assessment for a mortgage, but that it looked forward “to hearing the Prime Minister’s plans in more detail to see how we can continue to help in this area.”
In announcing the policy Johnson said: “Just as no generation should be locked out of home ownership because of when they were born, so nobody should be barred from that same dream simply because of where they live now.”
However, the proposals do have critics.
Yesterday, Polly Neate, chief executive of homeless charity Shelter, said that the policy was a “dangerous gimmick” that would take much needed housing stock out of the market while more than one million people in Britain remain on council house waiting lists for permanent homes.