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Labour’s Mortgage Guarantee Scheme for First-Time Buyers Faces Backlash from Renters Groups

Labour’s newly unveiled mortgage guarantee scheme for first-time buyers has come under fire from left-wing renters groups, raising concerns about its effectiveness and broader impact on the housing crisis.

The London Renters Union (LRU), a key player in the 20-group Renters Reform Coalition, has voiced strong opposition to Labour’s “Freedom To Buy” initiative. The group argues that the scheme would perpetuate existing housing inequalities, leaving millions of renters in precarious and expensive living situations.

“Labour has not committed to significant investment in social housing. Instead, the party relies on private developers who predominantly construct high-priced market-rate homes, unattainable for many,” an LRU statement read. A spokesperson added, “Home ownership alone cannot resolve the housing crisis. Without addressing the flawed rental system, countless renters will remain trapped in extortionate and insecure homes. We need rent controls and a shift towards increased public housing.”

Acorn, another renters’ union, echoed these sentiments on social media, criticizing the scheme for failing to address the root causes of the housing crisis. “This policy does little to alleviate the housing crisis, using public funds to sustain high house prices without solving underlying issues. We need bold solutions, not superficial tweaks to a broken system,” Acorn tweeted.

Generation Rent also expressed discontent even before Labour’s official announcement, highlighting the struggles faced by renters in saving for a house deposit. “Renters deserve security too. With over 12 million people renting privately and many lacking savings, trying to save for a deposit is an uphill battle. Soaring rents need to be curbed to prevent more tenants from facing homelessness,” the group stated.

The Labour scheme has also been met with scepticism from the mortgage industry. Opinions canvassed by Newspage reveal widespread criticism, with experts questioning the policy’s practicality and effectiveness. Lewis Shaw of Shaw Financial Services remarked, “This policy is as useful as a chocolate teapot. Pre-pandemic, 95% loan-to-value mortgage lending was common without political intervention. To genuinely help first-time buyers, Labour should address wealth inequality and increase housing construction.”

Katy Eatenton of Lifetime Wealth Management criticized the scheme for lacking substance, noting that existing mortgage guarantees have seen limited uptake. “We need to build homes that first-time buyers can afford, not schemes that leave them at a financial disadvantage when remortgaging,” she said.

Justin Moy of EHF Mortgages dismissed the scheme as redundant, pointing out that similar initiatives have been in place since 2021 with minimal impact. “Labour is promoting something that already exists but is underutilized. There’s less substance here than meets the eye,” Moy commented.

Stephen Perkins of Yellow Brick Mortgages added, “Labour’s policy lacks real substance. Existing mortgage guarantees are almost obsolete, and house building targets mean little if affordable homes aren’t constructed. This policy won’t significantly impact the property market or sway voters.”

As Labour’s “Freedom To Buy” scheme continues to draw criticism, the debate highlights the complexities and challenges in addressing the UK’s housing crisis, underscoring the need for comprehensive and innovative solutions.

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