The Leeds Reforms announced by Chancellor Rachel Reeves on Tuesday include a range of measures to help first-time buyers onto the property ladder.
The Bank of England is set to allow more lending at over 4.5 times a buyer’s income, which the government says could help 36,000 more people buy a home within the next year. A further 10,000 potential buyers could benefit from lower income thresholds on the Nationwide’s ‘Helping Hand’ mortgage.
Simplified mortgage lending rules being considered by the Financial Conduct Authority will also make it easier for existing borrowers to remortgage, while the introduction of a permanent government-backed Mortgage Guarantee Scheme will secure the availability of high loan-to-value mortgage products in times of economic uncertainty.
The measures were announced by the chancellor as part of a plan to boost both individual savings and the UK economy, in the widest-ranging reforms to financial regulation in over a decade.
The reforms will make the UK the number one destination for financial services by 2035, the government claims, attracting inward investment and creating skilled jobs across the UK – including within the legal sector.
‘Working people will be equipped with the support they need to invest and grow their savings, under plans to rewire the financial system to attract investment, create good skilled jobs across the country and put more money into people’s pockets’, the government said in a statement.
Announcing the measures, Reeves said:
“We fixed the public finances and stabilised the economy. Now we need to double down on our global strengths to put the UK ahead in the global race for financial businesses – creating good skilled jobs in every part of the country and helping savers’ money go further through our Plan for Change.”
Although the plans were welcomed as ‘encouraging’ and ‘a welcome boost’ by some property experts, Chris Gardner, CEO of specialist property finance company Atelier, said the first-time buyer measures don’t go far enough. He explained:
“This set of measures fall far short of what’s needed to stimulate demand and to jump-start the market for first-time buyers. Ultimately, the measures lack additionality. There will be thousands of hopeful homeowners who will continue to be locked out of the housing market after tomorrow.
“The market is desperately calling out for the reintroduction of the successful Help to Buy scheme as this helped address issues on both the supply and demand sides. The first incarnation of ‘Help to Buy’ helped 400,000 buyers get on the ladder, while making the treasury a tidy profit of £1.8bn. We need radical reform from this Government not timid policy change that tinkers around the edges of the market.
“And within the wider property ecosystem, the continued restrictions on high loan-to-value lending for new build homes sends the wrong message. They do little to incentivise developers to build at scale — which is what’s really needed if the government is serious about hitting its target of 1.5 million new homes this parliament.”
