A Labour Party victory would introduce a Freedom to Buy programme to replace the current Mortgage Guarantee Scheme — but nine out of 10 first-time buyers are unaware of the existing measure.
A report by Barratt Homes shows that 88% of FTBs are unaware of the current scheme, “which means many may not benefit from its predecessor under the new government”.
It adds that one in five, or 20%, of FTBS lack awareness of other affordable home ownership schemes.
As part of its election manifesto, Labour said it will introduce a permanent mortgage guarantee scheme, helping prospective homeowners who struggle to save for a large deposit.
The Freedom to Buy scheme would see Labour support 80,000 young people to get on the housing ladder over the next five years.
If wins power on 4 July, the party would work with lenders and the property industry to increase uptake of the scheme.
In addition, the party plans to build 1.5m homes over five years.
The current Mortgage Guarantee Scheme is set to end in June 2025. It sees the government offer lenders financial guarantees to provide mortgages that cover the other 95% of a home loan, subject to affordability checks, on a house worth up to £600,000.
The study explores various available affordable home ownership schemes. These include the Lifetime ISA, Shared Ownership, First Homes Scheme and Guarantor Mortgages.
Lifetime ISA: The scheme can be on first homes or saved for later life. Savers can pay up to £4,000 each year until the age of 50. The government will add a 25% bonus to your savings, up to a maximum of £1,000 per year.
Shared Ownership: Borrowers can buy a share of the home between 10% and 75% of the full market value. They then pay rent to the landlord for the share they own.
First Home Scheme: FTBs can buy a home for 30% to 50% less than its market value. The home must be the buyer’s only or the main residence. The home can be a new build or sold through an estate agent.
Guarantor Mortgages: This scheme uses someone else’s savings or property as collateral for the mortgage. The lender will require buyers to meet terms and conditions and by signing the contract you agree to pay your mortgage on time and in full. If these are not met, the guarantor could face repaying the mortgage.
Barratt Homes sales and marketing director Steve Mariner says: “Affordable home ownership schemes are great for helping FTBs get onto the property ladder, and having a variety of schemes available means that they can choose the best fit for them, depending on their circumstances.”
Barratt’s study used data group OnePulse to survey 500 FTBs to find out what affordable home ownership schemes they were familiar with.
