The latest party to unveil its housing policies ahead of the general election in May are the Lib Dems, who earlier this month told the BBC about their ‘rent-to-own’ homes election pledge.
Help for the young generation
The Conservatives have also outlined their plans which include a promise to build 200,000 starter homes for first-time buyers in England under the age of 40. These homes would be available at 20% below the market rate.
David Cameron’s party has also revealed its ‘Help-to-buy’ ISA policy which will see the government provide young savers with a £3,000 bonus.
On the opposite side of the bench, Labour’s housing policies include building 200,000 new homes by 2020, as well as new towns and garden cities. However, the party has come under fire for its proposed ‘Mansion Tax’ policy, which they would introduce to help reduce the NHS deficit.
30 year rent-mortgage
Speaking about the plan, Lib Dem leader Nick Clegg explained that young UK people would make monthly payments on their abode, which are equivalent to rent, to help them build up a share in their home. There would also be no deposit required, which causes major problems for first-time buyers.
Following 30 years of monthly payments, the occupants would gain full ownership of the property.
Critics have questioned how the Lib Dems would help social enterprises and housing associations build homes through this method, with many believing that the tax payer could be left with a big sum.
Making home ownership a possibility
The Lib Dems are aiming to build 30,000 rent-to-own homes by 2020 and claim that they have the support of housing associations and other organisations. As part of the plan, occupants would have an option to cash-in their share at any time and use the money as a deposit for a home on the open market.
“For working young people the dream of home ownership is increasingly out of reach,” Mr Clegg told the Evening Standard.
“Prices are so high renters cannot afford to save for a deposit, which means they can never take that first step onto the housing ladder.
“Young people deserve better. Rent-to-own will mean, regardless of their background and family circumstance, they will be able to make this dream a reality.”
Long term financial stability
Despite not being the Lib Dems biggest fan, Richard Carr is a support of this scheme and believes it is reminiscent of the USA ‘Fannie May Freddie Mac’ scheme. Set up after WW2, the scheme worked well and was highly effective.
Richard believes that the UK banks aren’t functioning correctly and the pendulum has swung so far in the opposition direction, that it’s now ridiculous. He feels that whichever party gains power in May they should either apply pressure for a relaxation in the bizarre requirements to get a mortgage in 2015, or copy the scheme.
People should have the ability to buy a home as it gives people long term financial security. If the UK ends up with generations on non-home owners it will place more pressure on the state as many people down size and the use the redundant equity to subsidise their pension. In Richard’s opinion, there needs to be more banks and the FSA need to get more realistic!