Guides How the Government Could Enable Different Organisations to Support First-Time Buyers

For the first time in over 60 years, first-time buyers are facing the housing market without any major government-backed financial support schemes. Unless bold action is taken, we risk continuing a cycle where many people don’t buy their first home until their mid-30s or later, or in many cases are unable to at all.

Strategies to Improve Access to Homeownership

Here are several practical suggestions that could help reverse this trend and make home ownership more achievable:

1. Allow Housebuilders to Offer 5% Deposits

Enable housebuilders to provide first-time buyers with a 5% deposit contribution as part of the sale, reducing the barrier to entry and stimulating demand.

2. Pension-Backed Deposits for Public Sector Workers

Allow key workers from the public sector, such as nurses and doctors, who already receive a 23% pension contribution, to borrow against a portion of their pension for a house deposit. This could be tightly regulated and capped to ensure long-term pension security.

3. Leverage National Insurance Contributions

Employees who have consistently paid National Insurance for a set number of years could be allowed to borrow against their contributions for a deposit. This recognises their contribution to the system and helps them invest in their future.

4. Employer-Backed Low-Interest Loans

Introduce a scheme where businesses can offer low-interest loans to employees for home deposits. In return, the businesses would receive tax credits from central government as an incentive for participation.

Closing Thoughts

If any government is serious about supporting first-time buyers, these ideas deserve serious consideration. Naturally, there will be critics who focus on the risks, such as the impact on future pensions or job mobility, but we must weigh those concerns against the long-term benefits of homeownership.

Consider this: over a 25-year period, paying off a mortgage versus renting often leaves a homeowner in a far stronger financial position. Owning a mortgage-free home by retirement is a form of pension security.

Of course, these proposals would require support not just from government, but also from regulators like the Bank of England. It would take political will, and a willingness to think differently.

In cases where pension pots fall short at retirement, homeowners could access equity through products like life tenancies or equity release, allowing them to remain secure without losing their home.