Everything we know about the Boris Johnson's 5 per cent deposit promise to first time buyers

Boris Johnson announced his dedication to transforming generation rent into generation buy

The Prime Minister has promised to help young homebuyers, and transform generation rent into generation buy with 95 per cent mortgages. Here is everything that we know so far about Mr Johnson's proposed scheme.

Related: Over a third of homebuyers are confused by this part of buying a house

Boris Johnson made the announcement at the virtual Tory Party conference this week. In the wake of the pandemic with low deposit mortgages disappearing faster than the latest Aldi specialbuy, it sounded almost too good to be true.

'We need now to take forward one of the key proposals of our manifesto of 2019: giving young, first-time buyers the chance to take out a long-term, fixed-rate mortgage of up to 95 per cent of the value of the home - vastly reducing the size of the deposit,' said the PM.

boris johnson

(Image credit: Aaron Chown/PA Wire/PA Images)

'We believe that this policy could create two million more owner-occupiers – the biggest expansion of home ownership since the 1980s. We will help turn generation rent into generation buy.'

What is the generation buy scheme?

Boris Johnson offered little further information on how this scheme would work or when it would be introduced. It is a tricky promise to deliver with many lenders withdrawing their small deposit mortgages in the wake of the pandemic.

The government might need to act as a guarantor to help make the 95 per cent deposits a reality. However, that still doesn't solve the issue of how lenders will assess how affordable monthly repayments are. Though Johnson has hinted that the government may look at ways for these stress tests to be removed.

exterior of a red brick period house with driveway and white front door

(Image credit: Future PLC/Fiona Walker-Arnott)

Industry reaction

The housing industry, however, is sceptical about the PM's ability to deliver on his promise of two million more homeowners.

'The affordability of homeownership is a problem at present and providing buyers with a foot up via a smaller deposit will help many to overcome this hurdle,' comments Marc von Grundherr, Director at Benham and Reeves.

'In the more inflated markets such as London, it reduces the deposit required by some £25,000 and so the initial saving is notable.'

room with desk flower on desk and round mirror

(Image credit: Future plc)

James Forrester, Managing Director of Barrows and Forrester, comments: 'The cause of the dire situation we find ourselves in is the Government's sustained failure to build enough affordable housing year in, year out.'

'The inadequate supply of housing to meet demand is one of the driving factors that has caused house prices to spiral.'

Current help to buy schemes

The government currently already offers several schemes to help first-time buyers onto the property ladder. The Help to Buy equity loan and First Homes scheme supports first-time buyers purchasing a new build home.

Related: Experts reveal why first-time buyers should be looking to buy now

The Lifetime ISA is also available to those under 40 saving for a deposit. The government tops up £4,000 savings a year with £1,000. Many buyers are also able to take advantage of the stamp duty holiday for homes costing up to £500,000, available until 31 March next year.

Rebecca Knight
Deputy Editor, Digital

Rebecca Knight has been the Deputy Editor on the Ideal Home Website since 2022. She graduated with a Masters degree in magazine journalism from City, University of London in 2018, before starting her journalism career as a staff writer on women's weekly magazines. She fell into the world of homes and interiors after joining the Ideal Home website team in 2019 as a Digital Writer. In 2020 she moved into position of Homes News Editor working across Homes & Gardens, LivingEtc, Real Homes, Gardeningetc and Ideal Home covering everything from the latest viral cleaning hack to the next big interior trend.