Currently four in five new builds purchases using the scheme are by first-time buyers, but the review said this was one measure that would help homeownership and housing supply grow sustainably.
The Help to Buy equity loan scheme should be extended beyond 2021 just for first-time buyers, the Redfern Review has recommended today.
Currently four in five new builds purchases using the scheme are by first-time buyers, but the review said first-time buyers need more support to help homeownership and housing supply grow sustainably.
It also called for the government to increase maximum scale of lifetime ISAs, which are launching in April 2017 and allow up to £4,000 to be saved per year to a maximum of £128,000 with a 25% government bonus.
And for those without a deposit it also said rental conditions for tenants should be improved.
With the homeownership rate falling by 6.2% between 2002 and 2014, the report suggested first-time buyer credit constraints caused 3.8% of the decline.#
Paul Broadhead, head of mortgage policy at the BSA, said: "As we consistently find through our consumer research, the biggest barrier facing homebuyers is their ability to raise a deposit.
"The size of that is related to the price of homes; and prices are pushed up by a lack of supply in the face of increasing demand.
"Generally the issue is not that home buyers can’t get or can’t afford their mortgage payments, particularly now when rates are at a record low. House price inflation is underpinned, at least in part, by chronic underbuilding and decades of failure by successive Governments to address this undersupply through a coherent housing strategy.
"We know the private sector house-builder’s capacity is around 120,000 to 130,000 per year so diversity in housing supply to plug the huge gap between this figure and the 250,000 plus new homes needed each year requires local authorities to start to build at volume. We cannot continue to rely on the incumbent large house builders."
Richard Connolly, chief executive of Rentplus, welcomed the findings and recommendations of the Redfern Review.
He said: “We know a majority of renters would prefer to buy and that is where innovation around tenure types come in. Rent-to-buy is a policy whose time has come.
“It is a long-term flexible approach to housing that blends the best of ownership and renting rather than limiting someone’s choice to one or the other.
“We are already delivering rent-to-buy on the ground. Our experience has shown that it makes a real difference to people’s lives offering them long-term security of tenure, affordable housing costs and enabling them to put down roots in their local community.”
Ishaan Malhi, chief executive and founder of online mortgage broker Trussle, said: “The Redfern Review has rightfully cast a brighter light on what has become the biggest issue for young adults for a generation – affording their first home.
“Mortgage rates are as low as they’ve ever been, according to yesterday’s figures from the Council of Mortgage Lenders, yet homeownership is continually falling with young people bearing the brunt of this decline.
“The government has introduced various policies to stem the issue and housebuilders have also responded, with housebuilding now at its strongest level for eight years. But it will take a long time to tip the scales of supply and demand, making homes more affordable for young first-time buyers on moderate incomes.”
