The latest Mortgage Guarantee Scheme statistics highlight the weaknesses in Labour’s Freedom to Buy proposal, says a prominent financial services guru. 

Since its launch in April 2021, the scheme has supported just 45,775 mortgages, with 87% of these going to first-time buyers. However, the average property value under the scheme was £204,716, significantly below the national average, raising questions about its ability to cater to those in more expensive parts of the country. 

Karen Noye, mortgage expert at Quilter, is now warning that Labour’s pledge to make this scheme permanent under its rebranded Freedom to Buy initiative risks doubling down on policies that fail to meaningfully address affordability issues or the structural flaws in the housing market.

“While well-meaning, Labour’s plans do little to tackle the core problem of high house prices relative to wages, which continue to put homeownership out of reach for many. 

“The reliance on 95% loan-to-value mortgages leaves buyers with minimal equity, increasing the risk of negative equity should house prices fall—a real concern in a volatile market. Schemes like these are more of a sticking plaster than a solution, helping only a fraction of buyers while doing nothing to address the broader affordability crisis.

“Adding to the strain on first-time buyers is Labour’s decision to not extend the increase to the stamp duty threshold—a move that has already sent ripples through the market. In the short term, this policy will trigger a rush of buyers scrambling to complete purchases before the threshold reduction takes effect, artificially inflating house prices as demand spikes. In the long term, it makes homeownership even more expensive for first-time buyers, eroding affordability further and exacerbating the very issues schemes like “Freedom to Buy” claim to solve.”

Noye says Labour’s approach seems to ignore the lessons of past initiatives like Help to Buy. While that scheme enjoyed more uptake, it saddled buyers with hidden costs, such as the government’s share of property appreciation, which added financial strain to homeowners. 

She adds that the rising interest rates on equity loans turned what was intended as a helping hand into an additional burden, illustrating the pitfalls of short-term fixes without meaningful market reform.

She continues: “For first-time buyers, what’s truly needed is a commitment to addressing housing supply. Without sufficient stock, no amount of demand-side intervention will solve the affordability crisis. 

“Labour must prioritise policies that tackle the imbalance between supply and demand, such as incentivising housebuilding, streamlining planning processes, and increasing investment in affordable housing. These structural changes, coupled with measures to reduce the tax burden on first-time buyers, would go much further in supporting aspiring homeowners than merely tinkering with schemes that perpetuate the status quo.

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In its current form, Freedom to Buy risks being little more than a repackaging of existing policies that have already proven limited in their impact. Without addressing the fundamental issues driving house prices and providing long-term certainty to buyers, it is unlikely to deliver the transformative change the market so desperately needs.”