Mortgage brokers slam Labour’s ‘Freedom to Buy’ as sham
![](https://investmoneyuk.com/wp-content/uploads/2024/06/labour-rents.jpg)
Mortgage brokers have slammed Labour’s ‘Freedom to Buy’ proposal – its promise to get more young people on the housing ladder – as ‘smoke and mirrors’ and as useful as a chocolate teapot.
Labour announced on Friday that it would make the existing mortgage guarantee scheme – which sees the government act as a guarantor for people unable to save big deposits – into a permanent fixture if it wins the election on 4 July.
CHOCOLATE TEAPOT
But most brokers blasted the plans with Lewis Shaw, Owner at Mansfield-based Shaw Financial Services, telling the Newspage news agency: “This policy is about as useful as a chocolate teapot.”
And Justin Moy, Managing Director at Essex-based EHF Mortgages, fumed: “Labour are effectively promoting something that already exists and isn’t used. There’s less smoke and mirrors on the Paul Daniels show.”
The Conservative government launched the mortgage guarantee scheme in 2021 following the pandemic.”
The Conservative government launched the mortgage guarantee scheme in 2021 in response to the near disappearance of 5% deposit mortgage offers following the pandemic.
The scheme acts as a guarantor for buyers, covering some costs if a home is repossessed and encouraged lenders to offer deals with smaller deposits.
However, the scheme is only a temporary one and is due to come to an end in 2025.
Labour’s pledge is to make the scheme a permanent offer, claiming it would help over 80,000 young people ‘get out of their parents’ house’ and buy their own home over the next parliament.
POLITICAL INTERFERENCE
![Lewis Shaw, Owner, Shaw Financial Services](https://thenegotiator.co.uk/wp-content/uploads/2024/06/lewis-shaw-hs.jpg)
But Shaw says: “Prior to the pandemic, 95% loan-to-value mortgage lending was the norm. It happened without any political interference or putting the taxpayer on the hook. Has everyone forgotten that?”
He adds: “If this is the extent of their ingenuity to get people on the housing ladder then God help first-time buyers.
“If Labour really wants to help young people buy a home, then do the things that we all know are needed: Tax the super-rich, reduce wealth inequality and build more houses. It’s not rocket science.”
![Justin Moy, Managing Director at Essex-based EHF Mortgages](https://thenegotiator.co.uk/wp-content/uploads/2024/06/justin-moy-hs.jpg)
And Moy says: “Freedom to Buy looks great on the first read but then you realise it’s actually been in place since 2021 and many lenders don’t use it anyway.”
![Katy Eatenton, Mortgage & Protection Specialist at Lifetime Wealth Management](https://thenegotiator.co.uk/wp-content/uploads/2024/06/katy-eatenton-hs.jpg)
Katy Eatenton, Mortgage & Protection Specialist at Lifetime Wealth Management in St Albans, says: “Yet another scheme with no real substance.
“The existing mortgage guarantee offering has had limited take-up and this will be no different.
“We need to be building properties that first-time buyers can actually buy.
“Unless this happens and the properties are priced correctly, not with a built in premium that leaves them in a negative position when it is time to remortgage, none of these minimal deposit schemes are fit for purpose.”
LACKING SUBSTANCE
![Stephen Perkins, Managing Director at Norwich-based Yellow Brick Mortgages](https://thenegotiator.co.uk/wp-content/uploads/2024/06/stephen-perkins-hs.jpg)
And Stephen Perkins, Managing Director at Norwich-based Yellow Brick Mortgages, says: “Like most of Labour’s policies, this seems to lack any real substance.
“The Mortgage Guarantee scheme has become almost obsolete with standard 5% deposit mortgages available, and even 1% deposit options on other schemes from lenders.”
![Simon Bridgland, Director at Kent-based Release Freedom](https://thenegotiator.co.uk/wp-content/uploads/2024/06/simon-bridgland-hs.jpg)
Simon Bridgland, Director at Kent-based Release Freedom, adds: “This is a rehashed Tory policy under a Labour banner.
This scheme will continue to languish without much take-up given the unattainable price tag of homes being developed.”
And he says: “The real winners of these plans will be the developers, which, after being given a hall pass on planning, will continue to focus on the most profitable type of housing rather than creating quality homes for those starting out.
“Freedom to Buy appears to be the continuation of a scheme that is not really fit for purpose.”
OUT OF IDEAS
![Emma Jones, Managing, Director at Whenthebanksaysno.co.uk](https://thenegotiator.co.uk/wp-content/uploads/2024/06/emma-jones-hs.jpg)
And Emma Jones, Managing, Director at When The Bank Says No in Runcorn, says: “Are all the political parties out of ideas?
“It seems that way. We need something that helps people to borrow with affordability being capped against inflated prices in some areas. A 5% deposit is unlikely to help them.”
But at least one broker remained optimistic.
![Andrew Montlake](https://thenegotiator.co.uk/wp-content/uploads/2022/09/andrew-montlake.jpg)
Andrew Montlake, Managing Director at national brokerage Coreco, says: “This is a promising first offering from Labour and it is the permanent nature of the Freedom to Buy guarantee that could make all the difference, rather than having availability over a set period of time.
“This can allow lenders to take a longer-term approach in their offerings and ensure that competitive products are continually available for those with lower deposits.
“Whilst it doesn’t solve the long-term housing issues overnight, Labour have at least shown they understand them and have already shown they are willing to speak and engage with those on the front lines, which is more promising for the housing market as a whole should the next Government be a red one.”
Source link