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Whatever Happened to Help to Buy?

24/11/2014 17:13 GMT | Updated 24/01/2015 10:59 GMT

Whatever happened to Help to Buy? Ministers seldom mention the government's two-part mortgage guarantee and equity loan scheme these days, yet it was initially heralded by the chancellor and the prime minister as a major Coalition policy to allow those tens of thousands of people without access to large deposits to get on the housing ladder whilst stimulating the house-building industry at the same time.

The reason is that the scheme has fallen rather flat. The Treasury's own figures show that only a modest 18,564 mortgages were completed via the mortgage guarantee part of the scheme in the first nine months of its operation. Department for Communities and local government statistics show that just over 30,000 equity loans have been completed to date. Any progress is welcome but let's remember this is in a country that, according to Shelter, needs over 250,000 new homes to be built annually to tackle future demand alone, let alone address the backlog caused by years of undersupply.

The Scottish government's Help to Buy scheme has been similarly underwhelming, helping facilitate only 3000 new build purchases so far. Holyrood's official target for new affordable homes was 30,000 over the lifetime of its Parliament, i.e. by Spring 2016. It's obvious that both the UK and Scottish administrations need to do a great deal more if we are to even begin to solve the worsening housing crisis.

The answer will not be found in ineffectual interventions in the credit market. The Bank of England's new, more stringent, mortgage lending rules announced in July this year have effectively curtailed Help to Buy and the booming mortgage market in general. With housing supply so constrained under this government, and prices booming as a result, the bank's governor Mark Carney wisely stepped in to cool the market, essentially putting any further Government intervention off the cards for some time. Of course, the scheme will continue, but it will mean very little for the millions of young people and families trying to find somewhere affordable to live - instead, the solution should be a clear focus on helping "Generation Rent" by both building more homes for social housing and reforming the mid-market rental sector.

 

Contrary to much popular opinion, there is a huge amount of available land on which to build in the UK. A recent report from the estate agent Savills found that as many as two million houses could be built on vacant land owned by the government across the UK. In London, 100,000 new houses could be built on surplus land owned by Government departments and agencies. But despite this resource, the Coalition have not met their own targets for land disposals, and house building remains stuck at a record low level.

In addition to a push on social housing, local government should work with developers and housing associations to boldly expand the options for mid-market renters. I have spoken to many working professionals who do not qualify for social housing, yet cannot afford extortionate private sector rents, let alone get a mortgage. I wrote about this problem earlier this year in the Scottish Fabian Society pamphlet, A Pragmatic Vision for a Progressive Scotland. I argued for a consolidation of the nearly 200 housing associations in Scotland, turning a fragmented market into one with fewer players with the scale to improve services for tenants and offer the best value rents. Local councils should wake up to the value in offering high quality mid-market rental properties along with more social housing, and the government should target any housing subsidies on this area of the market. Helping more working families into stable homes will pay an economic dividend if policymakers can shift their focus towards affordable rents and away from intervening in the mortgage market to no great effect.

 

Without a strategic vision for housing our population, the UK's housing crisis will only get worse. David Cameron has presided over the lowest levels of house building in a century, and the Scottish government copy of his Help to Buy scheme has also done little to alleviate our own problems with a lack of homes. The Labour Party have pledged to put pressure on councils to free up surplus land for building. We should do the same across the public sector, building social housing and mid-market rental properties. Only then will we begin to offer genuine housing choices to those on low and middle incomes, giving ordinary people the rental security and affordability they deserve, as well as tackling the inflation-busting rise in house prices.