Would you delay your pension to get on the housing ladder?

By Andrew Lewin MP

For millions of young Brits, the simple aspiration to own your own home is almost universal. Sadly, the ability to realise the dream of home ownership is more dependent than ever on your ability to access the “Bank of Mum & Dad”.

In 2024, the Bank of Mum and Dad passed £9.6 billion down to help their children on the first step on the ladder – with £55,572 the average sum gifted. Life changing for 52% of first-time buyers who received support, but just as life altering for so many people who work equally hard, contribute just as much to society but simply don’t have wealthy parents (or grandparents) who can provide this cash injection.

Imagine two single 30 year olds in a private flat share in the south of England. Both earn £45,000 per year and in a good year, they save a couple of thousand pounds each towards a deposit. On their respective 30^th birthdays, one receives a gift of £50,000 from their parents to help them onto the housing market. Immediately they can look to buy a flat valued at around £250,000 - £300,000. The other flatmate has a lovely meal out with their parents, but they know it’s simply not feasible for his parents to offer any further financial support. At the current rate, she’ll have to save for at least another decade for a viable deposit – and might well conclude it’s just not viable at all.

Unsurprisingly, the Institute for Fiscal Studies concluded in a new report that the housing boom of the 90s and 00s has reduced social mobility and exacerbated the divide. If we don’t seek to break this cycle, it is a divide that will only grow with each subsequent generation.

There must be a role for government in breaking this cycle and helping young people access capital when they most need it, but I don’t believe it is one than can be met through traditional tax and spend. My proposal for the government is to offer a Citizens Advance.

The Citizens Advance would be open to any UK citizen who has been in work for 10 years. It would offer the individual the choice to unlock one year of their full state pension (£12,457 from April 2026) as a lump cash sum. In return, the participant would have their state pension age pushed back by a year*. For our 30 year olds, this means being able to access their state pension aged 69, as opposed to 68.

It’s called an Advance, because the government would bring forward spending already earmarked for that individual. Crucially it would be a choice, open at first to anyone who has spent 10 years in work and is aged under 40. The qualifying period means most people will become eligible between the ages of 28 to 32, precisely the time when many are hoping to get on the ladder, put down roots and start a family.

Yes, £12,547 won’t be enough for a deposit in many cases, but it can go a long way – especially outside of London and coupled with other changes in the market. An increasing number of banks and building societies now offer 95% LTV mortgages and the government is providing support for the expansion of this market, via the Mortgage Guarantee Scheme

Let’s return to our 30 year old, looking at one bed flats worth £225,000 in Welwyn Garden City. I’m biased as the MP, but at the time of writing, a number are available on Rightmove… With a 95% LTV mortgage, the deposit needed is £11,250, fully covered by her Citizens Advance. The outstanding mortgage will be just under 5 times her salary of £45,000, a ratio which is increasingly common for lenders to offer.

You can see from this example how a Citizens Advance really could be transformative to the prospects of getting on the housing ladder – especially when coupled with the other changes in the mortgage market and the government’s rightly ambitious housebuilding targets. Of course the benefit is doubled if you are in a couple and both choose to access the Citizens Advance at the same time.

To develop the Citizens Advance concept further, the Social Market Foundation is working on financial modelling, testing public opinion and examining how to make the most compelling case on why this is a policy worth pursuing.

We’re also exploring payback models, so that instead of a binary choice of accepting the Citizens Advance and pushing back your retirement age by a year, people will also be given the chance to repay the money over a period of years. Effectively enabling you to buy back their state retirement age to the original 68.

Early engagement with the policy has been encouraging and the first finding from a poll of 2,000 people aged 25-40 found that a majority surveyed were either positive or very positive about taking up a Citizens Advance.

There is more to do to stress test this idea, calculate the costs and win the political argument. We need a compelling offer for young people who have done everything right but can’t rely on family wealth to lift them onto the housing ladder. I’m convinced a Citizens Advance can be a serious part of the answer.

Andrew Lewin is the MP for Welwyn Hatfield

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To learn more about the policy as it evolves, sign up for updates at www.citizensadvance.uk