Home is where the heart is

Although its nothing to do with parenting, gadgets, or breastfeeding, as a housing professional (when I’m not on maternity leave) I can’t let the new housing proposals announced by the ConDem government pass me by without having a little comment on it….

The Government have stated that those struggling to get a mortgage in the current market will be assisted with obtaining up to 95% loan to value on new build properties. Tenants of social homes will also be allowed the right to buy their home at ‘as little as half the market price’. Apparently the money generated from this will be used to build a new home – a kind of one in, one out policy.

They have also pledged assistance for empty homes projects, and have promised funding and reviews of planning for stalled development schemes, as well as releasing additonal public sector land for building.

Given that the economic situation we are currently in has been caused by people overspending – taking out loans they cant afford – then the plan of the Government to encourage this further seems more than a little mad. Yes, it will create work for builders, plumbers, electricians, architects, and yes it will create badly needed new homes – but is this enough to revive the economy, and how will it really affect the housing market? Will buyers under this scheme end up with a massive debt around their necks that they simply cannot afford?

Although a ‘house for a house’ is promised for each property sold under the right to buy, I would worry about further marginalisation of social housing. Where will these new properties be built? Surely all the more desirable properties will once again be sold off, as was the case with the original right to buy scheme, leading to the opposite of what is currently considered as a sustainable housing area (a good mix of all different types of housing – owned, part owned, and tenanted socially and privately) and instead resulting in areas of home ownership, and other areas of housing which people don’t want to own. The new houses will presumably form part of new estates which will also be full of properties offered to buyers under the proposed mortgage scheme – so estates full of people who cant really afford to buy a house, and tenants renting through a social landlord presumably paying ‘affordable market rental rates’ as introduced by the new Housing Act, again in London and the South East not particularly affordable. Unless the Government then also invests in providing the infrastructure, services and facilities into these areas then it is a recipe for disaster. Where is the funding for schools, doctors, hospitals, dentists, local shops and facilities going to come from? Certainly not the already cash strapped councils. So – creation of the slums of the marginalised social housing that no-one wants the right to buy, and the slums of the new estates which do not flourish as they are unsustainable.

Providing funding for underwritten mortgages for first time buyers on new build only will also have an impact on those already in existing housing. Whereas first time buyers currently help form the chains of those moving up the ladder, this will no longer be so possible, and will likely cause stagnation within the wider housing market. Again, not good for the economy. And will the very fact that first time buyers will only get assistance for new build housing actually artificially inflate the value of those properties (above the premium already charged for new build properties) as there is competition for people to buy them? New properties may be required for a growing population, but why not provide mortgage assistance for buyers to acquire existing empty homes, and allow councils and social landlords to take on new housing stock instead?

In fact talking about affordable market rental brings me to a whole other question – why don’t the Government look at doing something about the cost of housing in general? The Private Rental Sector (PRS) is currently fairly unregulated in comparison to Social Rental, and the cost of private rental has been increasing further and further in recent months. Families living in the PRS face insecurity in terms of their home, as well as their rental level. Instead of constantly pushing an ideal of home ownership – something which in Europe is in fact rather unique to the U.K., with many countries having rental as the norm – why not look at sorting out the rental sector? If it were less expensive to rent, with more security and regulation of landlords, then many people may not feel the need to buy a house. For those who really do aspire to home ownership – if private rental were not so lucrative, such a large proportion of properties may not then be bought by investors intending to let them in a private market, therefore freeing up more properties available for families to buy at a reasonable price.

Its certainly a complex area and it is a dilemma how to solve the housing problems the U.K. is experiencing, but I for one am not convinced that the proposed solutions from the Government are the best way to do it.