Labor says it will make permanent a scheme designed to ensure low-deposit mortgages are available for first-time buyers

Labor says it will make permanent a scheme designed to ensure low-deposit mortgages are available for first-time buyers, if it wins the general election. The mortgage guarantee scheme was introduced by the Conservatives in 2021 when Rishi Sunak was chancellor of the Exchequer. It was extended until July next year by current Chancellor Jeremy Hunt. Labor leader Sir Keir Starmer said he wanted to "turn the dream of owning a home into a reality". The measure sees the government act as guarantor for part of a home loan – to encourage lenders to offer low-deposit deals.

The Labor Party says its plan will help more than 80,000 young people get on to the housing ladder over the next five years. But according to the Office for National Statistics, some 40% of 16.5 million people aged 15 to 34 in the UK were living with their parents in 2022 - about 6.7 million people. Labor says making the scheme permanent will mean young people facing tough conditions in the private rented sector or struggling to save will not be "locked out of homeownership". It would be known as "Freedom to Buy", the party says

In a statement, Sir Keir said that Labor would be "on the side of the builders, not the blockers", announcing the plans around home ownership. The party leader said: "A generation faces becoming renters for life." "My parents' home gave them security and was a foundation for our family. "As prime minister, I will turn the dream of owning a home into a reality," he added. The existing scheme allows lenders to purchase a guarantee on part of mortgages, so if a bank decides to repossess a house, the government could compensate some of its losses. The Treasury has designed its existing program "to increase the appetite of mortgage lenders for high loan-to-value lending" - so buyers face paying smaller deposits for their mortgage. Brokers have pointed out though that borrowers still have to pass checks to show they can afford mortgage repayments, not just raise a deposit.

Mortgage providers may only lend to those with a sufficient regular income, regardless of any government guarantee. This could just end up being a backstop as many lenders do not use the guarantee, as they are happy to offer deals with a 5% or 10% deposit in any case.As part of the plans announced on Thursday evening, the Labor Party also pledged to "reintroduce housing targets", fast-track planning permissions on brownfield land and prioritize "grey belt" building - moves which it claims could boost building by 1.5 million homes.