Parliament to consider using rent as mortgage evidence for first-time buyers
Almost 150,000 people have signed the Parliamentary petition posted in support of frustrated renters who are unable to get mortgages.
This means the government will respond to it and MPs will debate it in the House of Commons.
The problem is becoming increasingly acute particularly when saving a suitable deposit, and Hometrack research and insight director Richard Donnell noted that tougher stress test requirements were restricting first-time buyers on affordability.
Research conducted by Donnell showed the vast majority of first-time buyers could afford to pay the mortgage interest rate but failed affordability tests when the 7% interest rate stress test was applied.
Donnell said: “Regulation is turning the first-time buyer market into an 85% loan to value market.
“This is likely to continue perhaps until equity release becomes more mainstream and money is released by family to pass on to first-time buyers to boost deposits,” he added.
Impossible without handouts
The petition, which was set up by 27-year-old Jamie Pogson from Plymouth, echoes these thoughts.
“Since living on my own I have paid £70,000+ in rent on time yet still struggle to get a mortgage,” he wrote.
“Unless you’re getting handouts, wealthy or in receipt of inheritance it’s almost impossible. I want paying rent on time to be recognized as evidence that mortgage re-payments can be met,” he added.
Together chief executive of personal finance Pete Ball said the surge in popularity of this petition was clear evidence of the growing frustration among thousands of renters that aspire to own their first home.
“With the continuing shortage of housing in the UK, it’s harder than ever for first-time buyers to get on the ladder.
“The changes the government has introduced in the buy-to-let sector, such as the stamp duty increase last year, were intended to level the playing field and ensure more property was available, but what this petition highlights is that there needs to be better access to finance alongside this, so that these aspiring homeowners can get a mortgage for the property,” he added.
A date for the debate and a response from the government are expected by the end of March.