Government to allow first time buyers to use pension pots to reach property ladder

Turnbull2000

Seems to Tories have been listening to the CBI.

http://www.guardian.co.uk/society/2011/nov/18/housing-plans-new-homes

The plans also propose that borrowers should be able to use money in their pension pots to boost deposits.

Mrs_Bones

So on one hand they are trying to get more people to pay into and have private pensions. On the other hand they are saying to dip in to those pension pots???

Sorry I don't get that.

Turnbull2000

Mrs_Bones wrote: »

So on one hand they are trying to get more people to pay into and have private pensions. On the other hand they are saying to dip in to those pension pots???

Sorry I don't get that.

The economy continues to stagnate, so our politicians have reverted to default - boost house prices, land prices and the property market. Pensions are a problem for another day.

HAMISH_MCTAVISH

The prime minister is also expected to back plans, supported by the Confederation of British Industry, for a government-backed mortgage indemnity scheme for first-time buyers.

Ministers regard a fillip to housebuilding as one of the best ways of securing growth.

Under the mortgage indemnity scheme the government would cover the risk for the lender, which should enable first-time buyers to take out larger mortgages relative to the value of the home.

The plans also propose that borrowers should be able to use money in their pension pots to boost deposits. The Scottish government launched a similar scheme this year to help first-time buyers.

Average housing deposits are £37,375, representing 17% of the overall property value. A recent survey by Santander found that one third of non-homeowners believed they would never be able to afford a property. Four out of five under-30s cannot afford to buy a home without help from their parents.

Marc Vlessing, co-founder of Pocket, one of London's affordable homes agencies, said: "This helping hand for mortgage deposits is not a panacea, but will be welcomed by frustrated first-time buyers as well as those of us concerned about the destabilising prospect of an entire generation locked out of home ownership."

The number of new homes built has fallen dramatically in the past five years.

In 2010, the latest full year for which figures are available and the year in which the coalition Government came to power, this trend continued, with just 102,730 homes built – down more than 15,000 from the previous year.

Labour points out annual housing starts were 96,070 over the past 12 months, down by 7% compared with the previous 12 months

Interesting stuff.

IronWolf

At least theyre actually going to start building some more houses. Not a fan of them extending the right to buy scheme though. Why should some people get discounted houses?

Turnbull2000

IronWolf wrote: »

At least theyre actually going to start building some more houses. Not a fan of them extending the right to buy scheme though. Why should some people get discounted houses?

You reckon? I'd say the chances of a noticeable increase in house building are slim at best. Unlike the FTB mortgage support and pension proposals, the true political will for a large increase in supply is rather weak. And that's before you get to widespread opposition to new housing. Going by my local media, anti-housing protests are becoming more frequent, vocal and vicious - with the local authority more often than not backing down.

Historically, UK governments have been only interested in dealing with the demand side (subsidies, mortgage support, cheap borrowing) of housing rather than supply (building more). I see no sign of this changing, thus supply will remain chronically low and prices will rise - substantially so once these new proposals kick in.

Graham_Devon

It's already been discussed. The pension proposal is absolute lunacy.

Can't see it ever happening. Just says the proposals included the suggestion, which we already knew. If it does happen, more fool those who raid their pensions to buy a house. It's an act of sheer desperation.

HAMISH_MCTAVISH

Graham_Devon wrote: »

those who raid their pensions to buy a house. .

Don't think it's going to work like that.

AFAIK, the proposal is for them to be able to use a portion of the pension fund in the same way the Lloyds "lend a hand" scheme works.

So that someone with a 5% deposit could give the bank a guarantee of another 20% secured against their pension fund. But the bank would never take the funds unless they defaulted on the mortgage.

grizzly1911

HAMISH_MCTAVISH wrote: »

Don't think it's going to work like that.

AFAIK, the proposal is for them to be able to use a portion of the pension fund in the same way the Lloyds "lend a hand" scheme works.

So that someone with a 5% deposit could give the bank a guarantee of another 20% secured against their pension fund. But the bank would never take the funds unless they defaulted on the mortgage.

Either way it smacks of utter desperation by a bankrupt Government (of any persuasion). Successive governments have presided over the sale, pawning and , mortgaging everything else whilst allowing income to drain from the country and now they want to get money provided for the future drained away too.

No different to the student fees either, transfer the nominal debt off the balance sheet now onto individuals and sort out the enevitable "write offs" on another generations watch.

IronWolf

HAMISH_MCTAVISH wrote: »

Don't think it's going to work like that.

AFAIK, the proposal is for them to be able to use a portion of the pension fund in the same way the Lloyds "lend a hand" scheme works.

So that someone with a 5% deposit could give the bank a guarantee of another 20% secured against their pension fund. But the bank would never take the funds unless they defaulted on the mortgage.

That's why its a stupid idea. If someone loses their home they are likely in financial distress, and now they're going to lose a chunk of their pension too!

chewmylegoff

IronWolf wrote: »

That's why its a stupid idea. If someone loses their home they are likely in financial distress, and now they're going to lose a chunk of their pension too!

and the people most likely to default are the ones who could get a mortgage on 'normal' terms, and have had to put up their pension fund as collateral. they will have the least equity in their home, and also are likely to have the smallest pension funds.

so basically, get a mortgage with your partner, split up, they move out, stop paying the mortgage, you can't pay it, hello repossession, good bye pension. or alternative, lose your job, can't pay the mortgage. goodbye pension.

it's a stupid idea, because people without a proper financial education will jump at the chance and not understand the risks they are taking with their future. people need protecting from themselves, unfortunately.