xtra-long-term mortgages on family homes that can be transferred from parents to their children are being considered within the government as part of plans to alleviate the housing crisis.
The idea could enable people to buy a home with little or no expectation of completing mortgage repayments during their lifetime, instead the property and outstanding debt will be passed on to their children.
Mortgage loans lasting 100 years have been issued in Japan, but experts were skeptical about the impact the proposal would have in the UK.
The idea was driven into government as it could enable people to buy a bigger house than they might otherwise be able to afford.
We need young people to have the confidence, the deposits, the mortgage packages to be able to come into possession
The Government is already trying to increase home ownership with a package of measures, including extending the right to buy to tenants of housing associations and trying to increase access to 95% mortgages for buyers who are struggling to save for a larger deposit due to high rental levels .
Asked if he was considering cross-generation relationships that could be passed on between parents and children, Boris Johnson told reporters: “Yes, definitely.”
Speaking of his plans to get more people on the real estate ladder, the Prime Minister said: “I think there is a lot more room to help people with 95% mortgages, there are now quite a few products available, which we have tried to encourage.
“But we also want to find all kinds of creative ways to help people into ownership.
“Last year we actually had 400,000 first-time buyers, that’s a large number, we’re starting to turn the tide, but it’s crucial for this Government and for our overall economic story if those numbers remain strong.
“We need young people to have the confidence, the deposits, the mortgage packages to be able to come into possession.”
The most popular mortgage length among first-time buyers is about 30 to 35 years, but a multi-generation approach can extend it by decades.
Commentators, however, warned that it would not address housing supply problems and could drive up property prices further.
Scott Taylor-Barr, financial adviser at Carl Summers Financial Services, said: “I feel that Boris is coming from the wrong direction.
“It is not the mortgage market that prevents people from becoming homeowners; it is the cost of property in relation to people’s earnings.
“The issue is not to find ways to help people incur more debt, we need to find ways to build more homes, in the areas that people want and need to live.”
Rob Gill, managing director at Altura Mortgage Finance, said: “We are becoming Japanese. A decade of ultra-low interest rates, followed by intergenerational mortgages that have been a feature of the Japanese mortgage market since the mid-90s.
“Low interest rates raise property prices, long-term mortgages then keep it going as the only way first-time buyers can get on the ladder.
“It seems that governments around the world will do anything to prevent the real estate alternative from falling.”