First-time Homebuyers

Treasury – in the House of Commons on 19th April 2016.

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Photo of Victoria Prentis Victoria Prentis Conservative, Banbury

What steps he is taking to help first-time homebuyers.

Photo of George Osborne George Osborne Chancellor of the Exchequer and First Secretary of State

We are both building more houses and helping young families afford those homes. Some 400,000 new homes are being built over the years of this Parliament, half of them starter homes for first-time buyers. In the Budget I also launched the new lifetime ISA, so that young people no longer have to choose between saving for a home and saving for their retirement—we are going to help them do both. All this from a Conservative Government who support people’s aspirations to buy their own home and, in time, pass that on to their children.

Photo of Victoria Prentis Victoria Prentis Conservative, Banbury

Following the promise of an extra £19 million from the Treasury to help make Bicester garden town a reality, will the Chancellor update the House on the other means he is using to encourage house building, particularly for first-time buyers?

Photo of George Osborne George Osborne Chancellor of the Exchequer and First Secretary of State

I am delighted that we can support the community that my hon. Friend so ably represents in Parliament, and provide money for the upgrade of the M40 junction and a new secondary school to go with the new homes being built in Bicester. Of course that comes as part of a suite: we are investing in new starter homes and in shared equity products for people; our help to buy ISA has been used by hundreds of thousands of people; and the new lifetime ISA will also help young people. Those are all things we are doing to make sure this a home-owning democracy.

Photo of Alison McGovern Alison McGovern Labour, Wirral South

But there is a problem, because the Office for Budget Responsibility says that lifetime ISAs will increase house prices, as they will increase demand and there is relatively restricted supply. Is the Chancellor confident that his measures to increase the supply of housing will mean that the OBR is able to revise that analysis—yes or no?

Photo of George Osborne George Osborne Chancellor of the Exchequer and First Secretary of State

I agree that it is vital that we not only help people afford homes, particularly young first-time buyers, but build more homes. That is the plan we set out in the spending review; a big priority of the capital budget was the additional billions we will be spending on building homes—much more than was spent under the last Labour Government.

Photo of Christopher Chope Christopher Chope Conservative, Christchurch

How is having net migration of an additional 3 million people going to help first-time buyers find a home?

Photo of George Osborne George Osborne Chancellor of the Exchequer and First Secretary of State

As I say, we have the products to help first-time buyers in this country afford housing, but I make this observation on migration: you cannot have access to the single market without accepting the free movement of people. That is an absolutely clear principle, which has been made very starkly clear to this country by Germany and France, and is internationally accepted. If we want access to the single market, we have to accept the free movement of people.

Photo of Seema Malhotra Seema Malhotra Shadow Chief Secretary to the Treasury

Will the Chancellor confirm that the number of under-35s who own their own home has fallen by a fifth since he came to office?

Photo of George Osborne George Osborne Chancellor of the Exchequer and First Secretary of State

Under this Government the number of first-time buyers is up by 57%, whereas under the last Labour Government in the last Parliament it fell by 50%.

Photo of Seema Malhotra Seema Malhotra Shadow Chief Secretary to the Treasury

Perhaps the Chancellor will be hearing for the first time that the number of under-35s heading homes they own has fallen by more than 280,000 since 2010. Indeed, the number of affordable homes available to buy has halved since then. Private rental prices rose by 2.6% in the year to February, with incomes failing to keep pace. In September, the Government spoke of a “national crusade” to get 1 million homes built by 2020, but in November that figure was more than halved. Shelter says the Government’s starter homes scheme takes away homes that people on typical wages could afford. Is it not true that home ownership is in freefall because of the housing crisis, with young people who are aspiring to own being the hardest hit?

Photo of George Osborne George Osborne Chancellor of the Exchequer and First Secretary of State

I have already said that the number of first-time buyers is actually up by 57% under this Government, and I would make this observation: we cannot have a strong and successful housing market, and people getting on the housing ladder, unless we have a strong and successful economy. If we followed the prescription of the Labour Front-Bench team, of nationalising half the economy and imposing punitive tax rates, there would not be anyone able to afford any home in this country.

Photo of Chloe Smith Chloe Smith Conservative, Norwich North

Is it not the case that this Government’s lifetime ISA could help to produce, at maximum rates, a home deposit of up to £50,000, and, even at lower rates of savings, a deposit enough for a terraced home in Norwich costing £120,000?

Photo of George Osborne George Osborne Chancellor of the Exchequer and First Secretary of State

The lifetime ISA will be a very popular and successful new saving product precisely because it does not require people to choose between saving for a home or saving for their retirement; they can do both. We are also now looking at ways for people to draw on their savings during their lifetime for particular emergencies, or for when they need bits of money, like they do in the United States with the 401(k) scheme. The lifetime ISA will be a radically new savings product, and it will do what we need to do in this country, which is build a savings culture.