The CML’s recent report on housing schemes identifies gaps or anomalies that the Government may wish to address
Ahead of the Government’s new housing white paper due this month, our latest independent report – Government Housing Schemes: Accident or Design? – has been providing food for thought. It gauges how well the various schemes fit together and identifies gaps or anomalies that the Government may wish to address.
Key findings include the point that, over the next five years, a first-time buyer under 40 will be best off financially buying a starter home. Failing that, the best alternative will be Help to Buy Equity Loan or Help to Buy London, depending on location.
Only when affordability is constrained and homeownership on the open market constricted should a first-time buyer consider shared ownership. Social housing tenants should choose the Right to Buy scheme.
Affordability continues to be an issue across the country. The report analysed the proportion of local authorities where housing is attainable at a price-to-earnings ratio of four. It found the average single, full-time worker could afford to buy in only 120 of the 322 authorities, and in 59 if they wanted to purchase a semi-detached or terraced home. It concluded that, although the overall shape of housing schemes is inevitably the result more of accident than design, these schemes appear to be coherent and are at least fulfilling the Government’s key strategic objectives.
The current landscape presents two major challenges: building more homes and reversing falling homeownership rates. Converting the aspiration to be a homeowner into reality will be the target and the current schemes have helped achieve it in many different financial and geographical situations.
Hopefully, the white paper will build on past successes. We hope our report makes a useful contribution to the evolving landscape and assists in focusing policy on the best way of allocating resources to achieve the Government’s housing objectives as effectively and fairly as possible.
Paul Smee is director general at the Council of Mortgage Lenders