The government has set out the case for change for its First Homes scheme, which was unveiled by Housing Minister Robert Jenrick on Friday.
In its consultation paper, the government has stated its commitment to making the “dream of home ownership a reality for everyone”.
They recognise that more action is needed to support home ownership and “ensure that young people today have the same opportunity as their parents and grandparents”.
Over the past 23 years, the average house price in the UK has increased from £58,854 in August 1996 to £235,298 in November 2019.
This has meant that the deposit needed to buy has quadrupled.
The paper states how in 1996, 93% of young people would be able to buy a home with a mortgage for 4.5 times their salary, providing they had a 10% deposit.
By 2016, this figure fell to 61%.
However almost three quarters (73%) of people in England support the building of more affordable homes in their local area.
The government is proposing that local people should get first refusal on First Homes sold through this scheme to ensure that they are not priced out of the communities where they live and work.
There is currently a ‘Discounted Market Sale Housing’ scheme in place where properties are offered at a discount of at least 20% off open market prices, however there are only 1,000 of these types of homes built every year.
Paula Higgins, chief executive of the Homeowners Alliance, said of the scheme: “We know that first-time buyers will welcome the opportunity to buy a good quality home at a discount in their local area.
“We look forward to contributing to the consultation and working with the government to ensure that the scheme does what it says on the tin – more high quality and affordable local homes for current and future first-time buyers.”
Jackie Bennett, director of mortgages at UK Finance, added: “Buying a home locally can be a big consideration for house buyers, but sometimes the prices are simply out-of-reach.
“The First Homes scheme is a great initiative by the government to fix this problem and we are looking forward to working with them to finalise the details and help house hunters become home owners – in their own neighbourhood.”