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Sweeping proposals designed to help people on to the property ladder announced by the Prime Minister – here's what you need to know

Sweeping proposals designed to get more people on to the property ladder have been announced by the Prime Minister today (Thursday 9 June). It comes as homes now cost nine times people's incomes, according to the Government. 

At a speech in Blackpool, Boris Johnson said the Government was particularly concerned by the level of homeownership among younger people, with first-time buyers able to afford monthly mortgage payments but struggling to save for a deposit. Last year, house prices rose on average by £24,000, meaning the average house price now stands at £289,000 in England, and £542,000 in London, according to Halifax.

The Prime Minister's key proposals to drive up homeownership included: 

See our Mortgages and Homes section for more guides and tools to help you get the best deal.

Savings in Help to Buy ISAs and Lifetime ISAs will no longer impact universal credit and housing benefit entitlement

Entitlement to universal credit, which has replaced most benefits for new claimants, is affected by the amount of savings you have. Normally, the amount of universal credit you're entitled to tapers off when you have more than £6,000 in savings. Those with more than £16,000 in savings are not entitled to universal credit at all.

Meanwhile, Lifetime ISAs (LISAs) and Help to Buy ISAs are tax-free wrappers, designed to encourage first-time buyers to save for a property. Anything saved into one of these ISAs is topped up with a Government bonus – in the case of a LISA, this bonus is worth up to £1,000 a year, up to a maximum of £33,000. Anybody aged between 18 and 39 can open a LISA, but Help to Buy ISAs are now closed to new applicants.

In a bid to incentivise saving for a home, the Government has announced that any money saved into a LISA or Help to Buy ISA will be ring-fenced, meaning it will no longer count towards your maximum savings allowance when it comes to determining your entitlement to universal credit.

For example, if you had £3,000 in savings and £3,000 saved in a LISA, under the latest proposals the Department for Work and Pensions (DWP), which administers universal credit, would consider you to have £3,000 in savings, not £6,000.

This change will also apply when determining entitlement to housing benefit, which has a maximum savings allowance of £16,000 as well. However, as housing benefit is a legacy benefit, anyone who's not currently claiming housing benefit but needs such support would need to apply for universal credit instead.

In theory, this change should mean that more people are able to claim benefits, and not be penalised for saving towards a home at the same time. There is no set date when this change will come into effect, but when it does it'll apply in England, Scotland and Wales, with Northern Ireland making its own provisions.

Housing benefits can be used towards a first-time buyer's mortgage

Johnson also announced a plan to allow 1.5 million working people currently in receipt of housing benefit to use these payments towards getting a mortgage.

Currently, about £30 billion in housing benefit is paid out each year, much of which goes towards covering the cost of rent.

But the Prime Minister said that it was the Government's intention to give housing benefit recipients a choice: to use these payments towards covering the cost of their rent, or to use the payments towards getting their first mortgage. Under the current rules, housing benefit can only be used towards paying your rent, but not towards getting a mortgage.

There is no set date when this change will come into effect, but when it does it'll apply in England, Scotland and Wales, with Northern Ireland making its own provisions.

England's Right to Buy scheme to be extended to housing association tenants

In his speech, Johnson also announced an expansion of the current Right to Buy scheme, broadening it out to housing association tenants.

Originally a scheme under former Prime Minister Margaret Thatcher, under Right to Buy, eligible council housing tenants in England are able to buy their council house home at a discounted price. Currently, the discount is worth up to £116,200 in London and £87,200 across the rest of England.

Johnson said he intends for Right to Buy to be expanded so that housing association tenants living in the 2.5 million housing association properties across England would be able to buy their homes at a discount.

Exact details of the scheme, and how much the discount will be worth, are yet to be announced.

At the moment, qualifying housing association tenants are able to use the similar Right to Acquire scheme to purchase their housing association home at a discount, but this discount – a maximum of £16,000 – is less generous than that available under Right to Buy.

Right to Buy no longer exists in Scotland and Wales, and is ending in Northern Ireland this summer.

Increased availability of low-deposit mortgages

The Prime Minister also announced that the Government intends to carry out a review of the mortgage market before the end of 2022. He said the aim is to explore ways of expanding the availability of low-deposit mortgages to first-time buyers.

This follows in the wake of the Government's launch of the 95% mortgage guarantee scheme, a response to the tightening of mortgage lending criteria at the height of the coronavirus pandemic.

Additional reporting by the Press Association.

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