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The Government's 5% deposit mortgages risk inflating house prices

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In 2015, David Cameron addressed the Conservative Party conference and declared that he would “turn Generation Rent into Generation Buy”. This did not materialise. Six years later, the number of people relying on the UK’s private rented sector remains constant, if not slightly rising. It’s estimated that there are currently 11 million private renters in England.

So, you would be forgiven for having déjà vu this week. In his coronavirus recovery Budget, Chancellor Rishi Sunak is expected to announce a 95 per cent mortgage guarantee scheme intended to help people with small deposits get onto the property ladder. The Prime Minister has echoed his predecessor’s words. He, too, wants “Generation Rent to become Generation Buy”.

Will this scheme which, to all intents and purposes, is a reincarnation of the first iteration of Help to Buy, actually work? Probably not, because Help to Buy didn’t. Will it help those who need support the most – first-time buyers with low incomes and without access to family wealth? Unlikely. If you don’t earn enough to get a mortgage, this doesn’t change that. There can be no doubt that we urgently need to find ways to give people who rent housing security but this announcement risks making things worse for two reasons.

Firstly, it could further inflate........

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