As the Conservatives head towards their annual party conference, David Cameron has today announced their latest initiative under their flagship Help To Buy scheme. This time they are hoping to get 100,000 new homes built solely for first-time buyers under the age of 40. Buyers will get a 20% discount, funded by abolishing the levies which councils usually charge to fund social and affordable housing and community infrastructure. Could this be the big housing initiative we have been waiting for?
It is now clear that the Conservatives recognise they must have a political response to the huge challenge facing first-time buyers who have been locked out of the housing market by the great house price rises of the last 13 years. And from the outset, it must be said that this scheme is better than the previous two Help To Buy schemes which actually work to push house prices further upwards (the last thing first-time buyers need).
Any policy that aims to get more homes built is worthy of a fair hearing. However, we have some significant concerns about how this policy may play out in practice:
- Why is this scheme only going to be for those under 40? The housing market has been acting against first-time buyers for so long now that increasing numbers of the over-40’s have found themselves locked out of homeownership. We think that this age restriction is wholly unfair and may be subjected to legal challenges under the Equalities Act 2010.
- How do you define what price represents a ‘20% discount’? The developer will naturally want to sell the house they have built for as much money as they can, so enshrining the specific price that they must sell it for will require a clear legal basis.
- What is there to stop an unscrupulous buyer immediately selling the house on for an instant 20% profit? If a house that on the open market could achieve £250,000 is sold for £200,000, the temptation will be to immediately sell the house on and pocket a handsome pre-tax profit of £50,000. Could the scheme attach a permanent 20% discount to the property, perhaps through the planning system?
- How long will it take to build these 100,000 homes? We need to be building 300,000 homes per year right now, but only 114,000 were built in the last 12 months. This scheme doesn’t sound like it will deliver anywhere near the uplift in housebuilding that the priced out generation needs.
- Local Planning Authorities will not be happy about losing their funds for infrastructure and social/affordable housing. Given they are the bodies that grant planning permission, are we going to see national and local government battling each other over these plans? If it proves to be antagonistic to local councils the scheme may end up being counterproductive.
- Where are these homes going to be built? The Conservatives are saying they have identified brownfield sites that previously been earmarked for commercial or industrial use. We want to see housebuilding concentrated in the UK’s most unaffordable areas, which may not align with these sites.
The Conservatives pride themselves on being ‘the party of homeownership’, yet homeownership has declined throughout their time in government since 2010. Even if all of our concerns are tackled, it still doesn’t mean any of the fundamental problems facing first-time buyers will have been fixed.
“Long-term economic plan” is the slogan oft-repeated by Conservative politicians, but it doesn’t look as if much long-term thinking is going into their plans for the housing market.