Lunchtime news Thursday 15 May 2023

In a draft version of the Queen’s speech yesterday, Gordon Brown announced a £100 million ‘leg-up’ on the property ladder for first-time and low-income house buyers. For the first time, these groups will be able to buy new homes through a shared ownership scheme that had previously been limited to key workers. Anyone with a household income of less than £60,000 will be eligible. A further £200 million fund would also be made available to allow unsold new homes to be sold to housing associations. These homes would then be rented to tenants. The PM said: ‘our immediate priority… is to help family finances’. The Conservatives accused the government of taking many of the tories policies.

While Mr Brown said that he was the right man to steer the country through the difficult economic times ahead, governor of the Bank of England Mervyn King warned that there was worse to come. Households should tighten their belts even further in the wake of soaring energy bills, food prices and imports, said King. ‘For the time being at least, the nice decade is behind us’ he said, and added that the housing market will continue to fall after worsening ‘markedly.’

The Office of Fair Trading (OFT) is to launch a probe into whether people facing repossession are adequately protected in sale and rent back schemes. Since ROOF’s investigation into the schemes, where households in difficulty sell their house at a discount to investors and in return become a tenant in the house with the option of buying it back at a later date, more and more consumer groups and charities have called for regulation of the schemes. It is estimated that 20,000 people sell their homes to mortgage companies each year. The OFT is expected to report on its findings by September.

First-time buyers are increasingly looking to intermediaries to help them get a mortgage according to the Association of Mortgage Intermediaries (AMI). More than 82 per cent of first-time buyers used an intermediary in the first quarter of 2008, which is a 10 per cent rise from the previous year. Figures also show that intermediaries are responsible for 79 per cent of the all remortgages, also up 10 per cent from the same period in 2007.

And finally, in London most would-be homeowners are now facing a catch-22 situation. As mortgage finance dries up and many first-time buyers are unable to get a mortgage, rents are increasing faster than inflation meaning that people cannot save enough for a deposit on a property. The figures, compiled by Winkworth, show that rents have increased by an average of around 8 per cent compared with last year. For two-bedroom flats the increase has been up to 15 per cent in some areas. Winkworth estimates that rents will rise by a further 5 to 10 per cent over the coming year.