Crisis claim as generation ‘faces being locked out of housing’

The situation is threatening to spark a political “crisis” as young professionals have to live longer in shared houses rather than setting up their own home, a Labour frontbencher has claimed.

The deposit required by first- time buyers in Yorkshire to climb onto the housing ladder has risen from just £3,606 in 1997 to £29,289 this year, pricing many out of the market even with parental help.

The reluctance of banks to lend without sizeable deposits in the wake of the economic crisis has added to the difficulties of this generation, but the situation is made worse by the fact that private rents have been rising making it even harder for them to save.

But Ministers have pledged to “pull out all the stops” and say that as many as 10,000 people could be helped through a new FirstBuy scheme which will help them buy a new home with only a five per cent deposit.

Housing Minister Grant Shapps has urged would-be first time buyers to take part in the scheme, through which the Government and housebuilders will offer a 20 per cent equity loan if the buyer pays a five per cent deposit and takes out a mortgage for 75 per cent of the property. The loan will be repaid when the property is sold.

But Labour claims the Government is not doing enough to provide more affordable homes.

Shadow Housing Minister Alison Seabeck said: “I think that we will see the rumblings of a crisis breaking through into the political mainstream as young professionals in their twenties and thirties realise that they can’t afford to move out of shared flats and afford their own home – either for rent or to buy.”

“Stuck between high rents, tight credit and low savings, I worry that there is a vicious cycle keeping younger people from achieving their aspiration of somewhere to call their own.”

Government figures show that the average first time buyer in the region – who earns a salary of £34,886 – has to find a deposit of £29,289 in order to buy a property averaging £118,903.

The situation is in stark contrast to that in 1997, when Labour came to power, when the average first-time buyer property was worth just £40,340 and the average deposit required was £3,606. Back then, the average salary of a first time buyer was £17,512.

Coalition Ministers insist their planning reforms will get more homes built than under Labour’s controversial system of regional housebuilding targets. Because FirstBuy will only apply to new homes it aims to provide a boost to the construction industry.

Mr Shapps said: “With 80 per cent of young first-time buyers depending on parental help, I am determined that we pull out all the stops to help those who want to take their first steps onto the property ladder.

“FirstBuy will do just that – a Government-backed scheme making £500m available to offer a valuable alternative to the Bank of Mum and Dad. Over the next two years, this will help as many as 10,000 people in England to get that much-needed deposit together and realise their dreams of owning their own home.

“And because this help will be available on newly-built properties, it will also offer a much-needed boost to our housebuilding industry, supporting thousands of jobs across the country.”

Stewart Baseley, executive chairman of the Housebuilders Federation, said: “Firstbuy will help first time buyers, boost economic growth and provide a vital shot in the arm for the house-building industry.”