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Jonathan Rolande: Are 40-year mortgages really the answer to the property crisis?

The National Association of Property Buyers’ Jonathan Rolande gives his latest take on the property market.

Having just got back from holiday, I am in a good-mood, refreshed and ready to attack the second half of the year. That spring in my step was buoyed even further on Thursday morning, when the radio newsreader said a new solution was being discussed to solve the property crisis. 

Then, I heard what it was. I suddenly wished I was back on the beach and not heading towards the office. The story suggested Ministers believe 40-year mortgages hold the key to unlocking the problems we are seeing across the market.


Andrew Griffith, a key figure in the Treasury, is apparently hugely interested in pushing more of the 40-year deals which are common in the Netherlands and Denmark, to help more first-time buyers secure a property.

The idea that we think we can solve the crisis by asking people to pay more for longer just exposes how disjointed this whole debate has become. 

At first glance, 40-year mortgages are a good idea. They reduce monthly outgoings for younger people, just at the time of life, when they are likely to have the least amount of income and assets. They certainly can be a part of the solution in the right circumstances. 

But, make no mistake, enabling more people to buy property at a lower cost will inevitably fuel property inflation eventually eliminating the initial benefits. So it’s no silver bullet. 

The reasons for the current state of things goes back decades and includes, amongst many other things; high land value, population growth, immigration, foreign purchasing, a lack of newbuild, the rise of single occupant households, the spread of wealth to London and the Southeast, holiday homeownership, buy to let, the sale of council houses. In fact, the list goes on and on and on. 

Right now the stakes could not be higher. Property prices are at an almost all-time high and interest rates have climbed to levels not seen for well over a decade. And they show no sign of reducing any time soon. Rents are at the highest level we’ve ever seen too. They have been eating up huge chunks of income, predominantly for the younger generation who look with increasing envy at the parents and grandparents who bought property many years before. 

Property has long been at the forefront of the free market with almost no interference from government other than to prop it up with incentive schemes, such as stamp duty relief, and help to buy - two recent examples of policies that have exacerbated the problem. 

The Government knowing an election is due next year, seem to be belatedly realising just how important housing is to the electorate. They are desperately trying to think of ways to reinvigorate building and property sales. But they need to come up with better ideas than just promoting a 40 year-mortgage. 

Failure to at least begin to address the crisis may well be the undoing of the Conservatives which is an irony for the party that, for so long, championed home ownership. 

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    Brilliant words. At last an article that addresses the real underlying issue, the government needs to leave the market alone to find its own level. Stop pouring petrol onto the fire. Since 2008 the market has been left to its own devices with a fairly lame HTB scheme (for secondhand homes) being the only incentive. The result was steady growth and no boom and bust. Why the govt then decided to put in a time constrained stamp duty holiday I will never understand. It has just put us back in a boom and bust cycle. Let us get through this period of pain and leave the market alone. It will be fine and will find its own correct level. It’s simple economics.


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