After the Prime Minister’s housing announcement last week, agency trade body Propertymark is calling on the government to do more to boost the housing supply.
Speaking in Blackpool last week, Prime Minister Boris Johnson unveiled plans to make it easier for people to buy their own home. But critics say the plans are not going far enough and that the government needs to do more to boost the housing supply.
Apart from measures to make it easier for people to buy their own home, the Prime Minister has also announced a comprehensive review of the mortgage market, which is due to report back this autumn.
What The Plan Contains
In order to ensure that low-paid workers are able to buy their own home, the PM has announced that the ‘Right to Buy’ scheme will be extended to housing associations. This means, people on benefits will be able to decide whether they want to use their housing benefits for rent or for mortgage payments.
Under the proposals, benefit payments could be allowed to be counted as income when applying for a mortgage. This would open up a path onto the housing ladder for millions of people.
It is time to turn benefits to bricks. So we will look to change the rules on welfare so that the 1.5 million working people who are in receipt of housing benefits and want to buy their first home will be given a new choice: to spend their benefit on rent as now, or put it towards a first-ever mortgage.Boris Johnson, Prime Minister
However, critics have pointed out that Universal Credit (UC) is only available for households with less than £16,000 in investment or savings. Given that most lenders ask for at least a 10% deposit, most UC recipients will only have limited access to mortgages.
While the Government has indicated that they are looking at options to create a way for people on benefits to save money without it counting towards the benefits limit, with no concrete details it is difficult to see how this would work in practice.
A further point the critics have honed in on, was the lack of funding attached to the extension of the scheme. This means it is not clear how many people would benefit from the new package.
However, the Government also seems to have scrapped a pledge, from their 2019 manifesto, to build 300,000 new homes per year in England by 2025, as they have dropped plans to reform the planning system in England. Which will make it even more important that the Government does more to boost the housing supply.
Why Government Should Do More To Boost Housing Supply
It should be said that this is the third scheme that aims at giving people on benefits the chance to buy their home. Previous schemes have found that not all housing association properties could be sold.
While the Government has said there will be funding to replace the homes that have been sold, under previous schemes there were issues to get these replacements quick enough. And often the replacements were not like-for-like.
Given that there is already a shortage of social housing, with 1.1 million people on waiting lists, selling off these properties doesn’t seem a good plan. Especially when no measures have been put in place to boost housing supply for social housing.
Equally, creating more buyers by making it easier for people to buy their own home, will exacerbate the issue of the lack of supply of houses to buy.
Unless the Government will also implement measures to boost the housing supply, the problem could just become bigger.
Making it easier for people to save for a deposit or to get a mortgage as part of his Levelling Up agenda will have little value if there are not the houses available for them to buy.Eleanor Bateman, Policy Officer at Propertymark
Therefore, Propertymark is calling on the Government to introduce targeted stamp duty exemptions to incentivise downsizing or right-sizing. Because this would bring more houses on the property market, boosting the housing supply.
Furthermore, Propertymark wants to see more policies that will create more suitable homes for older and disabled people.
The Government has announced that they are planning to make small publicly-owned developments sites available to be turned into houses, in the Levelling Up And Regeneration Bill, which was announced in the Queen’s Speech.
However, the number of properties that would be made available would not be enough to significantly boost the housing supply. And unless more properties come on the market, prices will continue to rise, making it more difficult for people to afford a new home.
So while the Government seems to be ready to support the housing market, its plans lack detail, and they seem to fail to recognise the biggest problem the market faces: the lack of housing supply.