Tom Jones is Agent for Harrogate & Knaresborough and Deputy Chair (political) for Richmond (Yorks).
The word crisis is so overused in today’s politics it has almost come to describe merely whatever happens to be going on.
But the housing crisis is undeniable. Prices are up for almost every type of tenure; the average house in the UK now costs nine times average earnings – a near 150-year high – whilst the average renter now spends almost a third of their income on rent.
Last Friday, in the midst of a crisis of such grand scale, Help to Buy, the Government’s flagship policy on enabling home ownership, ended.
On Twitter George Osborne, the architect of the policy, crowed that the policy had “helped hundreds of thousands of families buy their own home, supported thousands of construction jobs” and pointed out the loans had repaid £2bn into Treasury coffers.
But those of us with eyes to see as well as tongues to speak can’t help but notice that despite Osborne’s almost indecent modesty, the housing crisis seems ever-so-slightly unsolved.
In fact, for Conservatives seeking to solve the housing crisis, Right to Buy should be regarded as one of the most regrettable pieces of mediocrity enacted since we reoccupied government. It comes to a well-deserved end with little to legacy beyond a decade of pain without reward.
When Osborne set out the policy, he said he hoped it would put home ownership back within reach of the majority of people, who “could not turn to their parents for help” and fire their ambition, because nothing symbolised the aspiration nation “more than the desire to own your own home.”
Stimulating the housing and construction markets would also have the benefit of boosting the economy, something Britain was in desperate need of.
As Larry Elliot described at the time, the Eurozone crisis and an unexpected inflation spike prompted worries that the UK was heading for its first double-dip recession since the 1970s, which induced a pivot in Osborne’s economic policy:
“The government’s original good intentions to rebalance growth towards investment, manufacturing and exports were overtaken by the need to get growth of any sort. If that meant ramping up the property market, so be it.”
Help to Buy’s juicing of demand has been, inarguably, a great success in boosting the economy; around 20 per cent of sales at the biggest housebuilders are dependent on the scheme, and house prices have rising a staggering 54 per cent in the decade since the policy was introduced.
However, those price increases are intensified in the new-build sector (to which Help-to-Buy is limited), which coincidentally command a premium of nearly 20 per cent. And these buyers are stung not once but twice, because as those properties fall to the market rate they are twice as likely as owners of older homes to sell at a loss – although it should be noted that with such runaway house price increases, this still only stands at five per cent.
A recent House of Lords report states that “evidence suggests that, particularly in areas where help is most needed, these schemes inflate prices by more than their subsidy value”. Paul Cheshire, a former government adviser, agreed, telling the Daily Telegraph in no uncertain terms that: “There’s absolutely clear cut evidence that Help to Buy inflates the prices of those homes that qualify.”
When he introduced the policy, Osborne said he was concerned that:
“the deposits demanded for a mortgage these days have put home ownership beyond the great majority who cannot turn to their parents for a contribution.”
And how stand the chances of that great majority now, after a decade of Help to Buy, to own their own home? The answer is even poorer than before.
In 2011, 43 per cent of the 25-to-34 age group were homeowners. By 2022, this has reduced to 24 per cent. In fact, a report from the Resolution Foundation found that:
“Young people are more dependent on substantial windfalls (in the form of the Bank of Mum and Dad, partnering or government support) to access home ownership than in the past.”
The sheer pace at which increases in house prices have outstripped wages has reinforced an ‘“inheritocracy”, in which first time buyers are even more reliant on the bank of Mum and Dad to finance their dreams of home ownership.
It was almost inevitable that juicing the demand side would have this effect, given the restricted housing supply; the years 2010-2015 saw some of the lowest housebuilding rates since World War Two.
Whilst they have climbed since – including a 33-year high of 243,770 in 2019 – no government since 1970s has hit the 300,000 housebuilding target. There is also the historic backlog to address; a recent Centre for Cities report finds that Britain has a deficit of 4.3 million homes which, even if 300,000 homes were built a year, would take 50 years to clear.
The chronic lack of supply and prioritisation of the owner-occupant sector has had knock-on effects for other tenures too; now just eight per cent of properties are affordable on housing benefit, the waiting list for social housing stands at over one million, and rents rising 20 per cent in just three years.
Housing and planning has always been a tricky subject. But for the last decade the pillar of the Government’s approach to enabling home ownership has been a single supply-side policy, aimed at enabling first-time buyers to purchase new build homes delivered by the private sector.
The failure of Help-to-Buy to deliver enough supply of homes has held up a whole generation on the road to home ownership.
This actually strengthens the case against future housebuilding; those who are already on the ladder benefit from skyrocketing prices, and can rely on the uplift in value to support their children getting a foot on the ladder; meanwhile, those able to get a first foot on the ladder become concerned about negative equity.
Introducing measures to increase housebuilding is going to be unpopular with these two constituencies, as well as the NIMBY crowd.
But Conservatives must, as James Vitali puts it, “build one nation of homeowners, not two nations split along generational lines.”
Home ownership is not just an economic and political necessity, but a moral imperative; it is a major step towards responsibility, family and independence, and a physical representation of someone’s stake in society.
Without it, the effects of this two-nation Toryism are clear to see: without anything to gain in material terms by voting Conservative, a ticking time bomb of intergenerational disparity is about ready to blow, with a whole generation on the losing side refusing to move rightwards as they age.
Delivering homes is an exercise in will, and our will is weak.
But without planning reform to make it easier to deliver homes wherever they are needed – not just where they are easy to deliver – and an extensive and intensive government-backed program of mixed-tenure housing, we will continue to prevent entire generations living the kind of life Conservative are supposedly in power to promote.
That means one that rewards hard work, provides security, allows you to pass on on a better life to your children.
As it stands, Help-to-Buy has failed on these counts. In fact, its biggest success has been in converting millions of potential homeowners to temporary Yorkshiremen as they scream ‘OW MUCH?’ at the prices in estate agent’s windows. It is a poor return for a wasted decade.
Tom Jones is Agent for Harrogate & Knaresborough and Deputy Chair (political) for Richmond (Yorks).
The word crisis is so overused in today’s politics it has almost come to describe merely whatever happens to be going on.
But the housing crisis is undeniable. Prices are up for almost every type of tenure; the average house in the UK now costs nine times average earnings – a near 150-year high – whilst the average renter now spends almost a third of their income on rent.
Last Friday, in the midst of a crisis of such grand scale, Help to Buy, the Government’s flagship policy on enabling home ownership, ended.
On Twitter George Osborne, the architect of the policy, crowed that the policy had “helped hundreds of thousands of families buy their own home, supported thousands of construction jobs” and pointed out the loans had repaid £2bn into Treasury coffers.
But those of us with eyes to see as well as tongues to speak can’t help but notice that despite Osborne’s almost indecent modesty, the housing crisis seems ever-so-slightly unsolved.
In fact, for Conservatives seeking to solve the housing crisis, Right to Buy should be regarded as one of the most regrettable pieces of mediocrity enacted since we reoccupied government. It comes to a well-deserved end with little to legacy beyond a decade of pain without reward.
When Osborne set out the policy, he said he hoped it would put home ownership back within reach of the majority of people, who “could not turn to their parents for help” and fire their ambition, because nothing symbolised the aspiration nation “more than the desire to own your own home.”
Stimulating the housing and construction markets would also have the benefit of boosting the economy, something Britain was in desperate need of.
As Larry Elliot described at the time, the Eurozone crisis and an unexpected inflation spike prompted worries that the UK was heading for its first double-dip recession since the 1970s, which induced a pivot in Osborne’s economic policy:
“The government’s original good intentions to rebalance growth towards investment, manufacturing and exports were overtaken by the need to get growth of any sort. If that meant ramping up the property market, so be it.”
Help to Buy’s juicing of demand has been, inarguably, a great success in boosting the economy; around 20 per cent of sales at the biggest housebuilders are dependent on the scheme, and house prices have rising a staggering 54 per cent in the decade since the policy was introduced.
However, those price increases are intensified in the new-build sector (to which Help-to-Buy is limited), which coincidentally command a premium of nearly 20 per cent. And these buyers are stung not once but twice, because as those properties fall to the market rate they are twice as likely as owners of older homes to sell at a loss – although it should be noted that with such runaway house price increases, this still only stands at five per cent.
A recent House of Lords report states that “evidence suggests that, particularly in areas where help is most needed, these schemes inflate prices by more than their subsidy value”. Paul Cheshire, a former government adviser, agreed, telling the Daily Telegraph in no uncertain terms that: “There’s absolutely clear cut evidence that Help to Buy inflates the prices of those homes that qualify.”
When he introduced the policy, Osborne said he was concerned that:
“the deposits demanded for a mortgage these days have put home ownership beyond the great majority who cannot turn to their parents for a contribution.”
And how stand the chances of that great majority now, after a decade of Help to Buy, to own their own home? The answer is even poorer than before.
In 2011, 43 per cent of the 25-to-34 age group were homeowners. By 2022, this has reduced to 24 per cent. In fact, a report from the Resolution Foundation found that:
“Young people are more dependent on substantial windfalls (in the form of the Bank of Mum and Dad, partnering or government support) to access home ownership than in the past.”
The sheer pace at which increases in house prices have outstripped wages has reinforced an ‘“inheritocracy”, in which first time buyers are even more reliant on the bank of Mum and Dad to finance their dreams of home ownership.
It was almost inevitable that juicing the demand side would have this effect, given the restricted housing supply; the years 2010-2015 saw some of the lowest housebuilding rates since World War Two.
Whilst they have climbed since – including a 33-year high of 243,770 in 2019 – no government since 1970s has hit the 300,000 housebuilding target. There is also the historic backlog to address; a recent Centre for Cities report finds that Britain has a deficit of 4.3 million homes which, even if 300,000 homes were built a year, would take 50 years to clear.
The chronic lack of supply and prioritisation of the owner-occupant sector has had knock-on effects for other tenures too; now just eight per cent of properties are affordable on housing benefit, the waiting list for social housing stands at over one million, and rents rising 20 per cent in just three years.
Housing and planning has always been a tricky subject. But for the last decade the pillar of the Government’s approach to enabling home ownership has been a single supply-side policy, aimed at enabling first-time buyers to purchase new build homes delivered by the private sector.
The failure of Help-to-Buy to deliver enough supply of homes has held up a whole generation on the road to home ownership.
This actually strengthens the case against future housebuilding; those who are already on the ladder benefit from skyrocketing prices, and can rely on the uplift in value to support their children getting a foot on the ladder; meanwhile, those able to get a first foot on the ladder become concerned about negative equity.
Introducing measures to increase housebuilding is going to be unpopular with these two constituencies, as well as the NIMBY crowd.
But Conservatives must, as James Vitali puts it, “build one nation of homeowners, not two nations split along generational lines.”
Home ownership is not just an economic and political necessity, but a moral imperative; it is a major step towards responsibility, family and independence, and a physical representation of someone’s stake in society.
Without it, the effects of this two-nation Toryism are clear to see: without anything to gain in material terms by voting Conservative, a ticking time bomb of intergenerational disparity is about ready to blow, with a whole generation on the losing side refusing to move rightwards as they age.
Delivering homes is an exercise in will, and our will is weak.
But without planning reform to make it easier to deliver homes wherever they are needed – not just where they are easy to deliver – and an extensive and intensive government-backed program of mixed-tenure housing, we will continue to prevent entire generations living the kind of life Conservative are supposedly in power to promote.
That means one that rewards hard work, provides security, allows you to pass on on a better life to your children.
As it stands, Help-to-Buy has failed on these counts. In fact, its biggest success has been in converting millions of potential homeowners to temporary Yorkshiremen as they scream ‘OW MUCH?’ at the prices in estate agent’s windows. It is a poor return for a wasted decade.