Committee publication · Correspondence · 11 March 2026
Letter from the Minister of State for Housing and Planning and the Economic Secretary to the Treasury to the Chairs of the HCLG and Treasury Select Committees dated 27 February 2026 following up oral evidence given on 10 February
From: Housing, Communities and Local Government Committee
Inquiry: Affordability of Home Ownership
Summary
Follow-up letter from the Economic Secretary to the Treasury and Minister of State for Housing and Planning to the HCLG and Treasury Select Committees, responding to 16 written questions arising from joint oral evidence on home ownership affordability given on 10 February 2026. The letter addresses student loans, social housing borrowing, VAT treatment, mortgage affordability, the Mortgage Guarantee Scheme, pensions, Right to Buy portability, commonhold reform, property taxation, and government oversight of housing policy.
Key findings
- Student loan repayments will be considered by banks as part of mortgage affordability checks; government will keep Plan 2 loan terms under review.
- Government does not set specific borrowing limits for local authorities on social housing but is extending preferential Public Works Loan Board rates to March 2027 and confirming a 10-year rent settlement at CPI + 1% to support council borrowing.
- No plans to expand VAT consultation to retrofitting; zero-rate VAT expansion announced at Budget 2025 will apply only to sale of land for new social housing.
- Mortgage Guarantee Scheme contingent liability stands at £1.1 billion (end September 2025) against a £3.2 billion cap; guarantees expire seven years after loan origination.
- No plans for portable Right to Buy discounts due to cost; Voluntary Right to Buy Midlands Pilot (2018–2021) showed limited take-up and practical difficulties.
- Shared owners will be able to join commonhold associations as permitted leaseholders; those in new commonholds will obtain freehold on final staircasing rather than remaining leaseholders.
Tone
ProceduralTopics
Key actors
Lucy Rigby KC MP, Matthew Pennycook MP, Florence Eshalomi MP, Dame Meg Hillier MP, HM Treasury, Ministry of Housing, Communities and Local Government, Financial Conduct Authority
Notable line
“… responsible to do so, individuals are able to extend nominal mortgage terms and make use of other, competitive, high LTV loans available in order to become homeowners …”
Key Quotes
“Regular student loan repayments will be considered by banks alongside other living costs as part of the affordability check for mortgage applications.”
“Government does not set specific limits or targets for local authorities to borrow for social and affordable housing, though they are required to borrow in line with the CIPFA Prudential Code.”
“Certainty of rental income gives local authorities the confidence and ability to borrow more. We are providing this certainty by confirming a 10-year rent settlement at CPI + 1%.”
“As announced at Budget 2025, the government will shortly consult on expanding the zero rate of VAT for the construction of new homes to the sale of land intended for new social housing to support the delivery of the Government's house building targets.”
“I can confirm that as at the end of September 2025, the total contingent liability under the Treasury's mortgage guarantee schemes is £1.1 billion”
“While the Government remains committed to supporting long standing social tenants to access home ownership, it has no plans to introduce portable discounts to the statutory Right to Buy scheme.”
“… for the first time shared owners will be able to be a full part of a commonhold. A core tenet of our approach to commonhold is the principle that 'the one who pays, has the say'.”
“Current UK property taxes, including SDLT, are a reliable and important source of revenue for both the Exchequer and local authorities.”
Source · parliament.uk record ↗