Rachel Reeves: I bought my first home in my 20s, that wouldn’t be possible today ...Middle East

Rachel Reeves will never forget the moment she got the keys to her first flat.

Living in London during her mid-twenties, she accepts she was “lucky” to get on the ladder – just a few years later the 2008 financial crash sent shockwaves through the housing market which are still being felt today.

Speaking exclusively to The i Paper from her red-walled study in No 11 about plans to boost homeownership among young Britons, the Chancellor admits that she wouldn’t have been able to do the same in 2025.

“No, no…I don’t think I would have done,” she says.

Reeves reflects that being “close” to her younger cousins in their early thirties and late twenties means she has first-hand knowledge of how it is “very, very difficult for people to get on the housing ladder” today.

The Chancellor accepts that she was fortunate to have been able to save for a deposit while working in Washington, DC during a secondment with the British embassy, which came with a rent-free apartment. She explains: “I was very lucky. I went and worked abroad for a few years, and part of the deal was that I got a flat as part of the job.”

“So I saved all the money I was previously paying on rent to save up a deposit.”

In the two decades since Reeves’s first property purchase, homeownership among young adults aged 25 to 34 has plummeted from 54 per cent in 2003 to 39 per cent in 2023.

Meanwhile, according to a study by the Office for National Statistics (ONS) last year, a fifth of women and a third of men aged 20 to 34 in the UK are still living with their parents.

“There has been a decline in homeownership over the last 10 or 15 years,” Reeves says. “I want to move in the other direction and find more people being able to get a mortgage and get on the housing ladder, because I know that that is the aspiration for so many people.”

‘We want to let people borrow more’

Reeves has endured a tough first calendar year as Chancellor, having faced down questions about her future after she was seen crying on the front bench of the Commons in July and following last month’s controversial, tax-raising Budget.

The Chancellor had previously been forced to defend accepting free corporate box seats to watch Sabrina Carpenter at the O2 Arena after The i Paper revealed she had been given the tickets in the wake of a row over donations to Labour ministers.

Her own housing arrangements also came under scrutiny after it was found she had broken regulations by failing to obtain a licence from Southwark Council when she rented out her house after moving to 11 Downing Street following Labour’s election victory.

But after surviving a testing period, Reeves is determined to look forward. Speaking between meetings and a festive reception, she is setting out major plans to loosen mortgage lending being considered by the financial services watchdog, the Financial Conduct Authority (FCA), which she has called for since entering office.

The FCA has said it will allow more flexible mortgage products which better reflect “different working patterns and income levels at different stages of life”, specifically helping first-time buyers by allowing them to borrow more.

“This is about changing things like the loan-to-value ratio, so you can borrow more and also borrow a bigger multiple of what your income is,” Reeves explains.

“As a young person, I think [this] is particularly useful because it’s at that stage in your life that you’re most likely to get pay rises,” she adds.

This is what economists expect to happen over the course of a person’s life. But, as the Chancellor admits, right now it’s not the case for all young people. Though inflation has fallen, it is still above the Bank of England’s 2 per cent target, meaning pay rises aren’t worth what they used to be.

Reeves concedes: “I do accept that for a lot of people, it’s felt like a long time since they’ve had a pay rise, but you get more of that early on in your career, when you’re learning so quickly and moving up the career ladder.”

More debt, more problems?

Britain’s subdued mortgage lending has rebounded slightly since Reeves became the country’s first female chancellor almost 18 months ago.

Earlier this year, the FCA relaxed some loan-to-income restrictions, which, they say, has allowed lenders to offer about £30,000 more to the average housebuyer and UK net mortgage approvals hit their highest level of the year in September.

However, first-time buyers are borrowing more than ever, according to analysis by estate agent Savills, which found more than 390,000 first-time buyers borrowed £82.8bn in the 12 months to September, a 30 per cent increase on the previous year.

The FCA’s plans have raised concerns amongst experts about the levels of debt being taken on by first-time buyers.

Housing analyst Neal Hudson, of Henley Business School, said: “Higher loan-to-income multiples just mean people are spending more on mortgage repayments than on other things, like food and travel, in the wider economy.”

Hudson added: “There is also a risk that the reforms push up house prices.”

Nonetheless, Reeves told The i Paper she is certain that her approach “is the right one”.

In the Chancellor’s view, “building more homes, combined with the greater flexibility with the regulator’s [mortgage] rules”, will give first-time buyers opportunities which have been closed off to them in recent years.

Reeves adds she is worried by seeing “people moving further and further away from where they live” in order to buy a home. This concerns her for “practical” and “emotional” reasons. Family and friendship networks, she says, are “really important”, particularly for people who want to have children.

The Chancellor also hints she could be prepared to go further in the future.

Housebuilders and developers have been lobbying her for a return of Help to Buy – the Conservative government scheme which gave taxpayer-backed loans to buyers with small deposits before being wound down in 2023. Will she explicitly rule out a return of the scheme, or something similar?

“I think that our approach is the right one,” Reeves says when pressed.

“Housebuilding is really important, and that’s why we’re ripping up and reforming all the planning rules [and] making housing more affordable. The best way to do that is to bring interest rates down by returning stability to the economy.”

While the Chancellor says the Tories’ Help to Buy scheme did not successfully “increase homeownership”, she does not explicitly deny that she would step in if required.

Indeed, it was arguably Reeves’s confidante, former Labour prime minister Gordon Brown, who invented the idea of government-backed homeownership with Help to Buy’s forerunner, Home Buy Direct, in 2008.

Reeves stands by 1.5m target

Following a drop in inflation from 3.6 per cent in October to 3.2 per cent in November, the Chancellor was gifted an interest rate cut to 3.75 per cent by the Bank of England, which could smooth the path for her mortgage plans.

Labour’s target of building 1.5 million new homes by 2029 is critical to Reeves’s pursuit of economic growth and she remains “committed” to the target.

However, hitting that goal remains a long shot for the Government: around 200,000 new homes were built during Labour’s first year in office, well below the 300,000 a year rate needed over the course of this Parliament. The Office for Budget Responsibility has warned that the Government will not meet its target.

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The number of planning permissions submitted has risen, however, and The i Paper understands that the Ministry of Housing, Communities and Local Government is confident that they will be able to announce further increases next year.

Electorally, a growing body of research suggests unaffordable housing has contributed to the rise of populist politics across Europe. There’s a reason former Tory housing secretary Michael Gove warned his party the housing crisis was “a threat to democracy itself”.

“The world is incredibly volatile at the moment,” Reeves says. “The best thing we can do to help people get on the housing ladder is to ensure that interest rates stay low, [and] continue to come down, so that more young people [and] families can get on the housing ladder.”

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