The call is the key finding of a YouGov survey carried out for the New Homes Marketing Board, whose chairman, David Pretty CBE, has been championing help for first-time buyers for some years. He first suggested a Government-backed savings scheme almost three years ago.

“Even the recent substantial falls in property prices – which would normally boost affordability – have failed to help, thanks to punitive interest rates and the much larger deposits now required,” said Mr Pretty. “The reality is that first-time buyers are now worse off than ever.”
 
The public now understands the problem very clearly. The YouGov poll showed that almost 60 per cent of respondents believe their children will have no hope of buying a first home without very substantial cash help from their own savings – often known as the ‘Bank of Mum and Dad.’

David Pretty said: “More parents than ever before believe that first-timers today are in a very difficult situation and are starting to despair that their youngsters will ever be able to get on the property ladder. 

“Irrespective of their income, first-time buyers cannot now buy without a very large deposit and, unless they are lucky enough to have parents who are in a position to help them, or have some significant savings already, most will find it a real struggle to raise the much larger minimum deposits now required, especially if they are already renting. Currently, the situation is so bad that deposits as large as 40 per cent are required to get a decent interest rate from mortgage lenders” he said.

Mr Pretty first raised the idea of a national deposit savings scheme for first-time buyers three years ago and again last summer, following which Chancellor Alistair Darling was widely reported to be considering such a scheme. It has not yet happened and the New Homes Marketing Board now believes the need is urgent and immediate.

Under Mr Pretty’s plan, savers would get up to five years to accumulate a maximum of £30,000, at which point they would receive a 25 per cent tax-free bonus or concession, pushing the maximum possible total to £37,500. This final figure would provide a 20 per cent deposit on a typical new home, plus Stamp Duty, legal fees and other costs. 

“Such a scheme would not only be a great boost for beleaguered first-timers but would encourage and reward a return to good old-fashioned saving habits – something we need now that the days of easy credit have gone” he said. 

 “A national Home Deposit Savings Scheme exclusively for first-time buyers would actively encourage them to avoid overstretching themselves and to think about planning early for their deposit. It would get them to start making regular monthly payments with the prospect of a maximum £7,500 bonus at the end - an amount which could make all the difference” he added. 

Mr Pretty’s suggested nationwide savings scheme would only be for qualifying first-time buyers and would therefore only be able to be used once. It would require subscribers to make regular savings each and every month for a minimum of two years and a maximum of five years. 

When savers reach their target, the 25 per cent tax-free bonus would be triggered by the accredited start of a first-time property purchase. The scheme would only be applicable to property for owner-occupation, not those for investment.

Mr Pretty added: “Obviously we all want and need the mortgage market to get moving again and for lenders to require sensible deposits with reasonable interest rates, but that seems a long way off.  But a national savings plan like the one I have been proposing, properly formulated and regulated, could easily be initiated by Government and administered through building societies and banks.
“It would not be expensive to the public purse, as it targets only a relatively small but vital sector of the housing market. And by attracting more savings into the banks, it would also increase the funds available for mortgage lending.
“There are various ways the precise details could work. The key thing, however, is the important principle of setting up a national vehicle which encourages early and regular savings and rewards that renewed saving habit. There are no quick or easy solutions to the current housing malaise but a savings plan like this should be part of the normal landscape of the future.”

END

For media enquiries contact Bob Barlow on 01440 783636 or 07860 429073 or bob.barlow@rbc-pr.com

Notes to editors:

1. All figures, unless otherwise stated, are from YouGov Plc.  Total sample size was 2306 adults. Fieldwork was undertaken between 22nd – 26th May 2009.  The survey was carried out online. The figures have been weighted and are representative of all GB adults (aged 18+).

2. Please click here for detailed YouGov survey results, including breakdowns by region and socio-economic grading.

3. The New Homes Marketing Board (NHMB) was established in 1982 by the Home Builders’ Federation (HBF) to promote the need for new housing to the general public and raise awareness of the benefits of new homes. The NHMB is supported by HBF members and the majority of home builders registered with the National House Building Council, as well as material producers, suppliers, and associated industries. See www.nhmb.co.uk

4. David Pretty has for many years campaigned to highlight the plight of first-time buyers and the causes of the housing shortage. He was CEO of Barratt Developments PLC until October 2006, and was made a CBE for services to house building In the Queen's Birthday Honours List 2007.  He is a Director of the Home Builders Federation (HBF), Chairman of the New Homes Marketing Board, a trustee of The Prince’s Regeneration Trust and an appeal board member of Shelter, the homelessness charity.  He contributes regularly to trade publications and is an occasional advisor to Government and financial institutions on housing issues. Most recently he jointly headed the Killian-Pretty Review into the planning applications process, which reported at the end of 2008.