Tories' lifeline for the first time buyers

by Jane Merrick, Political Reporter, Daily Mail, May26, 2004

Millions of desperate first-time house-hunters would be offered a foothold on the property ladder under a Conservative government. Buyers would have up to half of the cost of their new home paid for by the mortgage lender. The lender would then sell its part of the equity to the owner when he or she could afford to buy, either in stages or all at once.

It would make buying the average £154,000 property - or around £250,000 in London - much more palatable. Tory strategists argue that everyone should have the chance to stake their claim in the booming property market and that owning a house should not be out of reach to first-time buyers.

Shadow ministers said the 'shared equity' plan was the next logical step from Margaret Thatcher's flagship 1980's policy of giving council house tenants the right to buy their homes. The Conservatives also want to extend the right-to-buy to Housing Association tenants.

Latest figures show that only 37% of would-be first-time buyers can afford to buy their own home, down from 46% 15 years ago.

The scheme has the backing of the Council of Morgage Lenders, which represents 98% of the industry. The Government would provide non-financial assistance, such as advising the industry on regulating such deals.

Tory housing spokesman, John Hayes, said tackling the 'crisis of affordability' would be a priority of the next Tory Government. "We want to bring about an ownership revolution. We would kick-start this plan by bringing the lending industry, builders and local authorities together. Promotion of shared equity will be at the heart of the Conservative Party's help for first-time buyers, key workers and other people currently struggling to fulfil their aspiration to home ownership. First-time buyers who can't afford to buy 100% if a house might be able to afford half or two thirds."

"Labour's strategy of subsidising nurse, teachers and other so-called key workers to buy homes were just a 'quick fix' for symptoms of a soaring housing market," Mr Hayes added. "Affordability is about people, not buildings."

In 1993 in London, a home cost around four times the annual income of those in the bottom quarter of the earnings scale. By 2002, that figure rocketed to eight times. It is estimated 35% of first tbuyers in London need help from their parents or others.

At any one time around 881,000 first-time buyers get on the property ladder. Many more who want to buy cannot afford to do so. The average age of today's first-time buyer is 36.

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