A prominent lettings Industry figure has slammed Boris Johnson’s latest housing market utterances, branding them “off the cuff” and likely to lead to a long-term crisis.
David Alexander, the chief executive officer of DJ Alexander Scotland - that country’s largest lettings and estate service, and part of the UK-wide Lomond Group - says Johnson’s latest proposal for 50 year mortgages is just “another risky, spontaneous announcement aimed at temporarily inflating the housing market.”
Over last weekend Johnson said he was considering so-called multi-generational 50-year mortgages which could be passed on to their children when people die. The idea could see people being able to buy a home with little or no expectation of completing mortgage repayments during their lifetime. Instead the property and outstanding debt would be passed on to their children.
Alexander says: “The implications of 50-year mortgages are quite severe and coupled with the recent pronouncements on extending Right to Buy and enabling those on low incomes to use benefits to buy properties rather than rent seem to be ill thought through, back of the cigarette packet ideas rather than coherent housing policy.”
He continues: “Now is certainly not the moment to fuel growth in the housing market. Prices have risen at an unbelievable rate in recent years so any encouragement of the market should be treated with caution. It is easy to forget that it took average house prices in Scotland nine years to recover from their peak in May 2008 after the last property crash occurred. It is also worth noting that average prices have risen by £42,313 since May 2008 to April 2022 but that £35,040 (82.2 per cent) of that increase has occurred in the last two years since May 2020.
“The housing market does not need longer mortgages, less stringent affordability criteria, or higher borrowing multiples. If you want to stabilise or reduce prices, then you need to increase supply. Demand has been outstripping supply for years in both social housing and the private sector and unless this is resolved you will continue to see prices rising.”
And Alexander concludes: “A more coherent approach would be to encourage more homebuilding through an easing of the planning system; much more social house building; and encouraging investment in the private rented sector to continue to meet the demands of people not currently buying and not eligible for social housing. A 50-year mortgage is simply temporarily sustaining the market and passing debt on to the next generation which does nothing to resolve the long-term underlying issues in the housing sector.”