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9 June 2022

Don’t mess with mortgages – just build more houses

Boris Johnson's speech today added another item to the long list of policies that have done nothing to address the supply of new homes.

By Emma Haslett

Boris Johnson’s gift for misdirection was evident in today’s announcement of a new “benefits to bricks” Right to Buy plan, which he claims will help people on housing benefit to purchase the homes they live in, alongside a review of the mortgage market aimed at helping renters.

This is the latest element in a long campaign of housing-market trickery by this government. In its 12 years, it has introduced a rash of complex mechanisms aimed at helping young people climb the first rungs of the housing ladder without actually doing anything to fix the real problem: spiralling house prices.

We’ve had FirstBuy, which meant first-time buyers only had to come up with a 5 per cent deposit; it was then replaced by Help to Buy equity loans, which provided a 20 per cent loan for first-time buyers to use as a deposit, as long as they could stump up 5 per cent. We’ve also had Help to Buy mortgage guarantees, where the government acted as a guarantor for first-time buyers; NewBuy, which was the same but for new-build homes; the Help to Buy ISA, which gave savers a cash bonus from the government, and the Lifetime ISA, which was the same but only for 18-39 year-olds.

What is mind-bending about all this is that the government would rather perform these financial contortions – would rather give away money in the case of the Help to Buy ISA – than address the reason people on middle and low incomes can’t afford to buy: namely, that the UK doesn’t have enough homes.

The figures have been trotted out on so many occasions, it’s almost not worth doing again, but here we go anyway: a report by the National Housing Federation and Herriott Watt University has said England alone needs 340,000 new homes a year, of which 145,000 should be affordable. The government has committed to increasing housing availability by building 300,000 new housing units a year by the “mid-2020s”. It is currently a long way off its target: last year just 174,880 homes were started, according to figures from the Department for Levelling Up, Housing and Communities.

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Addressing the lack of supply would, admittedly, curb house price growth. But keeping house prices on an upward trajectory is so deeply baked into the Tory philosophy that the party would rather home-ownership declined than force those who do own homes to suffer the value of their biggest asset falling. Only, the voters might not agree: last year a leader in the Spectator, the magazine Johnson himself edited, bemoaned the “assetocracy” created by never-ending house price rises, while 63 per cent of 50-64 year-olds and 64 per cent of over-65s say they’d be “happy” for their home not to rise in value over the next decade if it means those who don’t own a home would get onto the housing ladder.

Those homes that are completed are built in spite of the government, not because of it. Speak to anyone in the house-building sector and they will launch into an impassioned description of every stupid, obstructive planning regulation that prevents them from delivering more. Some complaints – particularly ones around Section 106, the regulation that forces house-builders to ensure sufficient public realm infrastructure like schools, doctor’s surgeries and affordable homes are provided – are illegitimate. Others, particularly those that concern the glacial pace of the system, should be listened to. 

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The plans announced today by Boris Johnson will do nothing more than remove much-needed social housing from an already stretched system, and put those who do take advantage of its offer into vast amounts of debt. A mortgage market review that helps renters enter the housing market without savings will have to circumvent rules by the Bank of England preventing people from borrowing more than 4.5 times their income – which will put those who take advantage of it into, you guessed it, huge amounts of debt. Time for the government to stop re-announcing the same ideas and come up with something which is, to use Johnson’s words, “very big and very remarkable”: namely, just build some houses. 

[ See also: It’s time for renters to rise up ]

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