Natalie Elphicke is a non-executive director of a leading building society and a published policy writer on housing and housing finance with Policy Exchange and the Centre for Policy Studies. She was the first national director of the new Conservative Policy Forum.
As we come out of recession into recovery, more will need to be done to broaden financial access and to ensure that people are not financially excluded from home ownership, where they are working and can afford to pay a mortgage. The five per cent deposit scheme of Help-to-Buy is one approach that opens up access to affordable mortgage finance for someone who doesn’t have a Bank of Mum & Dad to draw on. There is more we can and should do to map out pathways for people who rent, so that they can buy their own home as circumstances allow. People still want a home of their own. Over three-quarters of private renters want to buy a home within ten years. We should support aspiration and people having housing choice.
The seeds for financial exclusion in the mortgage market were sown a decade ago. The last decade created a very different housing market. Home ownership started to decline under the previous government from 2003 and before the credit crunch. At the same time, the rise of the rented market and the amateur or speculative landlord was championed with tax and mortgage regulatory benefits. This has seen a surge in buy-to-let from 4 per cent to 13 per cent of all mortgages. Those decisions reversed the progress made on sharing access to housing wealth. It sets us on a path where there could be more renters than home owners by 2041 – Nation Rent.
At a national level – as Mark Carney, the Bank of England Governor, has rightly said – adequate housing supply is important to long term financial stability. There was a lamentable approach to housing delivery under the last government. At the same time that landlords were being championed, adequate extra homes were not being built to meet that landlord appetite or to maintain future financial stability. Many think that there are still not enough homes being built and are calling for central interventionist action. However, it does look as if we are seeing the hard work to unlock supply beginning to pay off. Independent and respected economists CEBR have said recently that we are at the beginning of a boom in housebuilding, with Housing Supply now set to exceed 300,000 homes a year within the next 5 years.
However, building homes isn’t enough if those new homes are just going to be rented, where people can’t buy their own home. Help to Buy does what it says on the tin: it helps people to buy their own home. It has helped people most outside London and the South East. The Daily Mail reported that Northern Cities benefited most from help-to-buy, and the Guardian has reported that over 87 per cent of those on the scheme were first–time buyers, with the average price paid for a home being around £185,000. That doesn’t sound like a scheme designed to prop up foreign oligarchs, far eastern middle class investors or high end developers in London.
What Help-To-Buy does do, and is intended to do, is to provide financial support for aspiring homebuyers, to bring forward confidence to the housing industry to build new homes knowing that there will be homebuyers who can get a mortgage. Our ability to shape our own lives and own our own homes is important in a property owning democracy. That’s why help-to buy, right-to-buy, shared ownership, shared equity and rent & buy matter: to provide greater access to housing finance and housing choice. Such practical steps will enable more people to realise the dream of owning their own home.