Andrea Jenkyns is MP for Morley and Outwood.
Conservatives have traditionally been the party of homeownership, and Margaret Thatcher’s idea that owning one’s home gives them a sense of independence and a stake in their country it is still more than valid. While the Housing Act 1980 gave five million council house tenants the right to buy their own houses, it is now difficult for part of the population to secure their first property. We have just chosen a new Prime Minister in Boris Johnson: this is an unmissable opportunity to be the party that champions home ownership and puts in mechanisms to help people get on the property ladder, whatever their background.
There is a link between homeownership and social mobility, and these two are enshrined in the conservative ideas that hard work pays off. To regain our mantle as the party of homeownership, we need to again make it possible for people on lower incomes to have the opportunity to own their own home. Currently, it is too difficult for the aspirational working class to save enough money to buy their first home, especially if they do not have parents who can help them with a deposit.
I would like to see the introduction of a new housing strategy in the form of a ‘Social Mobility Housing Policy’. This would be aimed to help both those in social rented housing, who are unable to save for a deposit. and those in the private rented housing sector, who pay much higher rents than those in social housing and also struggle to find ways to save up to buy a house.
Government schemes to promote home buying have been successful but they are not reaching a large part of the population who aspire to own their own homes. The average household income of those benefitting from Help to Buy is £52,000.
The National Audit Office found that 60 per cent of those using the scheme could have already afforded to buy. Rather than enabling those who otherwise couldn’t afford it onto the property ladder, for many it simply helped them to buy a bigger house, sooner.
In my constituency of Morley and Outwood average pay is £26,500 but first-time buyers need to stump up nearly £25,000 for a deposit. Unsurprisingly, this is the main obstacle to owning their home.
I recently asked the previous Housing Minister what assessment he had made of the effectiveness of the Help to Buy scheme in supporting less well-off people to buy a home. He said that the scheme helps those who cannot raise a large deposit, with over half of buyers putting down only a five per cent deposit to purchase their home.
What about the hard-working families who can’t even raise this whilst they are paying rent each month? They remain stuck in the private rented sector feeling unsettled about whether they can put down roots and start a family. Millions of them could afford the mortgage repayments, which are on average less than private rents in every region, but they are held back by the initial, prohibitive deposit hurdle.
With Help to Buy coming to an end in 2023, we should now be planning a wider range of homeownership models that support families who couldn’t otherwise afford it onto the housing ladder.
One model that inspired me when I was PPS to the Minister of State for Housing, was a Rent to Buy Scheme, where tenants save to buy the home they are renting. Unlike other schemes, it doesn’t require an upfront deposit but rather takes into account the renters’ earnings and potential to save. Under the model, tenants move into a brand new, privately financed home, pay an affordable rent (80 per cent of market rent including service charges) and benefit from a long-term tenancy of up to 20 years. This enables them to put more money aside each month towards a deposit whilst they can settle in a house they know they will one day own. When they are ready to buy, they are further supported by a gifted deposit worth ten per cent of the property’s market value.
To significantly increase homeownership, we must support innovative schemes like this that really tackle the barriers for those who are less well-off. I hope that the new Prime Minister will make home ownership a priority.