This would provide the government and the taxpayer with a clear return on investment, allow first-time buyers to access the market and free up stagnant chains, said RICS.
While there are a number of schemes being considered by local authorities and private funders this is fragmented at present and lacks the volume to significantly improve the number of buyers needed to stimulate market activity.
Over a third of potential buyers are trapped in rented accommodation as they cannot afford to access the property market with many seeing their purchases fall through due to difficulties with mortgage finance.
Some 38% of potential first-time buyers are forced to continue renting as they simply cannot afford to get a foot on the property ladder, chartered surveyors across the UK claim.
Furthermore almost 20% of those who do try and take the plunge are seeing their dreams of home ownership shattered as problems accessing adequate mortgage finance are causing their deals to fall through.
The large deposits required by many lenders coupled with steadily increasing rents across much of the country mean that those who cannot rely on the bank of mum and dad to raise a deposit are struggling to generate the funds that many banks require.
The government recently introduced its NewBuy scheme which is designed to assist first-time buyers by encouraging lenders to offer 95% mortgages. However as this is only available for newly built properties the vast majority of homes in the UK remain unaffordable and inaccessible for many.
Peter Bolton King, RICS global residential director, said: “Many first-time buyers are facing the prospect of a property ladder with no rungs. With lenders requiring such hefty deposits and affordable mortgage deals out of reach for most a generation of potential homeowners is facing an uphill struggle. Without allowing more first-time buyers to enter the market chains will continue to stall and transaction levels will stagnate.
“RICS would like the government to consider a mortgage indemnity scheme that works for the whole market not just new build. NewBuy could potentially lead to market distortion by reducing demand for second hand property. Without allowing first-time buyers greater access to the second hand market, chains and transaction levels will continue to stagnate.”
