Home Ownership: First-time Buyers

My Lords, the Government are reforming the broken home-buying and home-selling system to slash delays, cuts costs and stop sales falling through. Last week—it was on Friday, so it may not have got the attention it deserved, like my noble friend’s announcement—we published a road map setting out actions the Government are taking. Our new changes will cut home-buying times by around four weeks and save first-time buyers an average of £650.We are supporting first-time buyers through a range of routes, including shared ownership and the lifetime ISA, while addressing the root causes of unaffordability by increasing house supply and investing in affordable homes.

My Lords, I welcome the announcement on Friday. The Minister listed a number of schemes to help first-time buyers, but actually none of them has moved the dial, leaving many young people who are renting and want to be owner-occupiers paying more in rent than they would with a mortgage. Recently, the Prime Minister said: “For my family growing up, the roof over our heads was everything. But for so many families today, home ownership is a distant dream. My Government will make it a reality once again”. Would it not be a fitting part of his legacy if, within the next few weeks, he was able to make an announcement that brought those dreams closer?

We are already doing that. We made that announcement on Friday. From speaking to lenders, we know that many first-time buyers are not aware of all the innovative mortgage products that might help them, or that recent mortgage reforms may help them get on the housing ladder. I had a meeting with the Building Societies Association just a couple of weeks ago, and I met again with the round table that developed this road map last week. It is true that mortgage brokers can help potential homebuyers to find options that may be suitable for them. There are some fantastic new products coming forward. Anyone who read the Metro last week may have seen a wraparound from Lloyds saying it was introducing £5,000-deposit mortgages, back for the first time since 1996. So things are moving and changing, and the road map will help that even further.

My Lords, the noble Lord, Lord Campbell-Savours, is taking part remotely. I invite the noble Lord to speak.

My Lords, I return to my previous contributions on building housing on land acquired at agricultural prices, which is of particular benefit to young buyers. Can we look at developments in Hammarby in Sweden and Nijmegen in Holland, where there have been major housing developments in both locations on land acquired at reduced cost? All I ask is that we look at these precedents and consider whether, with a review of land title on housing sold on such land, we could similarly build in the United Kingdom and help young buyers.

I am always happy to look at any innovative ideas, wherever they occur. If there are those in Europe, I am happy to have a further look at them. We are making sure that we work harder on land availability through our partners in this programme. Some young people are currently paying far more in rent than they would have to pay if they had a mortgage. So making sure that finance is accessible and that properties are accessible is very important to getting this moving.

My Lords, would the Minister agree that a rather surprising and paradoxical way of helping first-time buyers is through making it easier to build for last-time buyers: those who want to downsize or right-size? Then you get two for one: you are helping the elder person but also providing, through the chain of lettings and purchases that follow, something for first-time buyers as well.

I thank the noble Lord for all the work he did on the Older People’s Housing Taskforce, which we will be producing our response to. The Government are committed to enhancing provision and choice for older people in the housing market through freeing up other homes. The new home-buying and selling process will reduce the friction that sometimes occurs and creates barriers to moving. The better upfront information it provides will support households to ensure that the home meets accessibility needs, for example, and that hidden costs, which often really concern older buyers, will be transparent right from the start.

My Lords, shared ownership promised a real lifeline for first-time buyers to get them on to the property ladder, yet soaring service charges, crushing maintenance bills and toxic lease clauses are trapping families in unsaleable, unmortgageable nightmares: I exaggerate not. What urgent steps are the Government taking to rescue and reform this scheme and protect hard-working buyers from financial hardship?

The noble Baroness is quite right. The Government recognise that some people who entered shared ownership have faced real challenges. We have introduced new expectations for landlords to improve the customer experience, which include giving greater consideration to long-term customer affordability, making sure that there is greater transparency and fairness on costs, ensuring that fees do not generate a profit and giving customers the ability to opt out of fees for optional services, which often was not pointed out. We are continuing to consider what more can be done to improve that experience for all our shared owners.

My Lords, despite a housing crisis, we are seeing housebuilding plummet as affordability collapses and first-time buyers are reluctant to extend themselves in a period of economic uncertainty. This is particularly the case in London, with an average house price of £661,000. The Minister talked about hidden costs; those houses attract a £23,000 stamp duty. Does she agree that we need to stimulate housebuilding and that removing the economically destructive stamp duty tax would be a good start?

There are exemptions from stamp duty for first-time buyers, so that is not the case for them. First-time buyers benefit from paying no stamp duty land tax up to £300,000 and are able to claim relief on purchases up to £500,000. The Government are working closely with the Mayor of London. I will meet the deputy mayor for housing this week to talk about what further steps we can take to help the building of homes in London. It is not true to say that no housebuilding is moving forward. We had an increase in growth in the first quarter of this year.

My Lords, home ownership is important, but social housing must play a central role in meeting the housing needs of young people. Over the past year, government decisions have put the social housing sector in a much better financial position, so can the Minister confirm that enough funding will be made available in the first years of the social and affordable homes programme to match the ambitious bids that have been made to build the homes we so urgently need?

I thank my noble friend for her recognition of the huge amount of funding—£39 billion, which is the biggest in a generation—allocated by the Government for social and affordable homes to be built. At least 60% of those homes will be for social rent. On 28 January, we published the update to our five-step plan to deliver a decade of renewal. We have had a significant number of bids for the first round of that funding, which will give councils and social housing providers the certainty they need, with the rent convergence procedure we have also introduced. Bids closed on 15 April and we look forward to those houses being built.

My Lords, the fact that the average age of first-time home buyers has shot up from 26 to 34 is not just bad news for mobility and well-being but very bad news for economic growth. Does the Minister agree that it is time to replace stamp duty with a less crude and transactional tax?

I have already set out the relief on stamp duty that is available for first-time buyers, but I agree with the noble Lord that it is important that we try to encourage more young people to purchase their first home, where they can afford to do so. The Building Societies Association is running a fantastic campaign called “Think again!” which explains to young people how they can do that. Financial institutions are making sure that young people understand that the mortgage rules have been changed. I urge anyone who thinks they may be able to afford it to go and see a mortgage broker. Lenders have changed, for example, how they deal with intermittent employment and so on, so it is much easier to get a mortgage, and people should understand that they can use a record of rent payment as a guarantee for their mortgage.