Labour’s new mortgage guarantee scheme for first-time buyers has drawn immediate criticism from several left-wing renter groups. Announced as part of Labour’s Freedom To Buy initiative, the scheme aims to help first-time buyers secure mortgages with a small deposit. However, groups such as the London Renters Union, which is part of the 20-member Renters Reform Coalition, have voiced their concerns. They argue that while the scheme may assist prospective homeowners, it does little to address the urgent needs of millions of renters who continue to face high rents and insecure housing conditions.
The London Renters Union contends that the Freedom To Buy proposals could exacerbate existing problems for renters by focusing on homeownership at the expense of rental market reforms. They warn that prioritising first-time buyers might leave many renters trapped in unaffordable and unstable homes. Instead of creating a pathway to affordable housing for renters, the scheme risks perpetuating the challenges they already face, without offering significant relief or security for those who are not in a position to buy a home.
The London Renters Union (LRU) has issued a statement sharply criticising Labour’s reliance on private house-builders in their housing policy. According to the LRU, Labour’s strategy lacks commitment to increasing funding for social housing and instead focuses on private developers. These developers predominantly construct high-priced market-rate homes, which are unaffordable for a large segment of the population. The LRU contends that without substantial investments in social housing, Labour’s plan falls short of addressing the core issues of housing affordability.
The LRU’s statement highlights a significant concern: “Labour’s current proposals do little to address the urgent need for more social housing. By depending on private developers, Labour overlooks the critical issue that these developers tend to build homes that are priced out of reach for many individuals and families. There’s an urgent need for Labour to make a concrete commitment to social housing if they are serious about tackling the housing crisis.” The group believes that private sector-led solutions are insufficient to meet the housing needs of the community, particularly for those struggling with high rental costs.
An LRU spokesperson elaborates on the broader implications of Labour’s focus on home ownership, stating, “We can’t end the housing crisis with home ownership alone. The housing system is rigged against renters, leaving millions trapped in extortionate and insecure homes. It’s crucial for the next government to introduce rent control measures to protect tenants from skyrocketing rents. Moreover, in the long run, we need to move towards a housing model with a much greater proportion of public housing. Only by addressing the rental market issues and increasing public housing can we ensure long-term housing stability and affordability for all.”
Acorn, another prominent renters’ union, expressed strong disapproval of Labour’s new housing policy on social media. In a tweet, Acorn stated, “This plan will do little to resolve the housing crisis plaguing the country. Using public funds to sustain high house prices only worsens the issue rather than addressing it.” They argue that Labour’s approach essentially maintains inflated house prices by using public money, which aggravates the housing problem rather than fixing it. Acorn calls for more radical measures from the next government to effectively tackle the housing crisis, rather than superficial adjustments to an already flawed system.
Generation Rent, a renters’ advocacy group, had voiced similar concerns even before Labour’s policy was officially unveiled. They argue that renters need stability and security, which the current proposals fail to provide. A statement from Generation Rent emphasized, “While it’s positive to see attention on the housing struggles faced by young adults, many people are not in a position to live with their parents until they can save enough for their first home. With 12 million individuals currently renting privately, and over half having no savings at all, the situation is dire.” Generation Rent stresses that more than half of private renters lack any savings, making it nearly impossible to save for a house deposit while coping with rising rent costs.
Both Acorn and Generation Rent advocate for more substantial reforms to the rental system. They argue that without addressing the underlying issues within the rental market and implementing broader social housing initiatives, millions will continue to face insecure and unaffordable housing. They call for the next government to introduce stronger rent control measures and a significant increase in public housing to ensure long-term housing security for renters across the country.
Setting aside money for a house deposit while renting feels like an ever-increasing struggle. A third of renters’ incomes are being swallowed up by landlords due to the uncontrolled rental market. The next government needs to take action to curb these soaring rents to give renters a fair chance at saving for a home.
Labour’s proposed scheme aims to permanently allow first-time buyers to purchase a home with just a 5% deposit. However, even this 5% can be significant—£12,497 on average across the UK, and up to £21,669 in London. If rent increases continue to surpass wage growth, many tenants could find themselves at risk of homelessness, rather than benefitting from this scheme.
The Labour Freedom To Buy scheme has also met with some scepticism from the mortgage industry, with questions arising about its effectiveness in addressing the broader issues in the housing market.
Newspage gathered industry feedback, with Lewis Shaw of Shaw Financial Services expressing harsh criticism of Labour’s policy. Shaw remarks: “This policy is ineffective. Before the pandemic, 95% loan-to-value mortgages were standard without government intervention or taxpayer involvement. If this is Labour’s solution for helping first-time buyers, then we’re in trouble. To truly assist young buyers, Labour should focus on taxing the super-rich, reducing wealth inequality, and building more houses. These steps are straightforward.”
Katy Eatenton from Lifetime Wealth Management is equally sceptical. She notes: “This is just another scheme with no real impact. The current mortgage guarantee has seen limited use, and this will likely be the same. What’s needed are homes that first-time buyers can afford. Unless we build appropriately priced properties without inflated premiums, these low deposit schemes are pointless.”
Justin Moy, Managing Director at EHF Mortgages, adds: “The ‘Freedom to Buy’ initiative might sound appealing at first glance, but it’s essentially been around since 2021 and is largely ignored by lenders. Labour is essentially promoting an existing and underused scheme. There’s more clarity in a magic show than in this policy.”
Stephen Perkins, Managing Director at Yellow Brick Mortgages, also criticizes Labour’s policy. He argues: “This policy, like many others from Labour, lacks substance. The Mortgage Guarantee scheme is nearly redundant with the availability of standard 5% deposit mortgages and even 1% deposit options from some lenders. While setting house building targets sounds promising, it means little if developers aren’t constructing genuinely affordable homes. Offering ‘first dibs’ on properties that remain out of reach for most first-time buyers is ineffective. This policy is unlikely to significantly influence the property market or sway voters.”
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