Dr Rosalind Beck is a doctor of Criminology and a Conservative Party member in South Wales.
In the week before the party’s annual conference the Cabinet met to devise a housing policy to rival that of Labour. A particular focus was to be on increasing the number of first time buyers (FTBs).
The outcome of these discussions is that the Prime Minister has announced a further £10 billion for the Help to Buy (HTB) scheme, with an estimated 135,000 benefiting.
Whilst this is theoretically a good idea, the Government should look at the scheme with fresh eyes. HTB aids people to purchase new-build property – and some say it is the developers who do the best out of this as they inflate their prices. This can mean that the buyer is paying over the odds and even without a house price correction could initially be in negative equity.
The Government could assist as many as five times more purchasers if it allowed HTB for often far cheaper second-hand properties. This would give the FTB a more modest assistance with the deposit, get them on the housing ladder and protect them from paying an inflated price. Whilst purchasing second-hand doesn’t stimulate house-building, why should FTBs shoulder the burden of increasing supply?
In fact, the £10 billion fund will issue average loans of around £75,000; in many parts of this country – bearing in mind that 87% of the population does not live in Greater London – this would cover the whole cost of a decent two-bed property; begging the question: why is there this emphasis on getting FTBs to over-stretch themselves on their first property purchase?
It is a relief however that the Cabinet did not go down the previously predicted route of attacking foreign investors in London; there had been a highly misleading suggestion in the Guardian that foreigners were ‘snapping up’ properties which would have suited FTBs. These were in fact off-plan properties which would never have been built without ‘foreigners’ having stumped up the cash in the first place. In any case, the idea that attacking one group helps another is illogical and not worthy of a Conservative Government.
The Government now needs to broaden its focus and look at the whole range of possible measures; some could also be cost-neutral as taxing a group less encourages them to do more of the taxable activity.
As part of a constructive and Conservative package of policies on housing which would help FTBs, I suggest the following could be included:
In sum, we all know that the number one policy objective in housing is to get more houses built, and all avenues to achieve this should be pursued. However, in the meantime, the Government needs to think constructively about what can be done with existing stock, must re-evaluate tax policy to support housing providers, tenants, and other would-be first time buyers and must focus on the entire country and all its citizens. It must not fall into Labour’s trap of calling for destructive and unconservative policies like rent controls or attacks on investors.