Opinion - government mortgage plan could mean more inherited debt

There’s talk of 50-year mortgages being introduced, loans that, along with the property they finance, could be passed to the next generation.

But when we already worry about the amount of national debt that the next generation will have to repay, is it feasible to ask children or grandchildren to finish paying for the previous generation’s home? And will they want to when the time-lapse involved means that many of them will have already bought homes of their own?

One argument is that the longer the repayment period, the lower the monthly cost. As we all know, people will max out their repayment which means they will be happy to spend more than they might have with a, say, a 30 or 35-year loan. In even the short term this could drive up prices rather than stabilise the market and thus defeat the very idea behind the longer terms.

As ever, there is no quick fix for the residential property shortage in the UK and introducing a measure that increases competition for the already limited stock will not be a pressure release valve – unless you consider it a broken one that will lead to an explosion! And as we age our housing needs change with many opting to sell up and downsize to release capital. That would make the 50-year mortgage pointless, although the loan would deliver higher interest rate repayments for longer to lenders. That’s economic nonsense for borrowers.

More housing stock is what we need, but in some areas, that’s difficult to provide. Within Portsmouth city limits, there’s very little available space for more new homes and this leads to the same dilemma as that facing the remote rural communities in Scotland which I left in my late teens to seek better prospects elsewhere. Young people have to migrate to afford the homes they want and filling limited space with high rises unless it’s also of a prime quality, such as some of the city’s waterfront properties, does not do it.

The tower blocks rushed in to build postwar have more than reached the end of their realistic lives and the former slum space they release on demolition is insufficient for enough replacement homes.

Easing planning restrictions to allow more green space to be swallowed up by the provision of homes is no solution either, as it provides homes at the expense of quality of life. That’s why the Green Belt between Portsmouth and Havant is sacrosanct, although, to be honest, that Belt is so tight in places that you’d miss its existence in less time than it takes to blink.

Residential housing in places like Portsmouth is a long-term problem for which generations of politicians and officials have been trying to find a solution. Some land has been released by changing industrial needs, but it’s unlikely to ever be enough to satisfy demand.

But one thing’s for sure. Asking a dwindling younger generation to finance not only their parents’ and grandparents’ pensions through rising taxation (the alternative is slashing the pensions of a huge demographic with a powerful voting base) while also committing them to finish the payments on a 50-year mortgage is not a realistic proposition.

I could conclude by saying it’s time for another rethink but that time has already run out in reality. Ideas need to stop, and action needs to start, but who has the right ideas? Whoever gets it right can be assured of a home on the Government benches in the House of Commons.

*Colin Shairp is Director of Fine and Country Southern Hampshire and Town and Country Southern estate agencies, Drayton