To boost homeownership the Government must ensure there are homes to rent at levels that allow people to save
Around this time last year we set out key agendas that we thought political parties should address in their general election campaigns. These included the desperate need for a clearer, over-arching housing policy and the doubling of supply to 240,000 houses a year by 2020.
A year later our concerns remain the same but have been substantiated by further evidence that the current housing policy is not having the impact the Government intended.
According to our latest research, mortgage affordability has hit its best level ever and first-time buyer repayments are lower than average rents in every region of Britain. However, we are simply not seeing any strong recovery in the level of homeownership.
Part of the explanation is a change in behaviour, with some younger households preferring the flexibility offered by renting. Alongside this is more tightly controlled access to mortgages, reflecting the rise in shorter job contracts and the absence of guaranteed long-term employment in a single organisation.
Then there is the wider context around improved affordability. House prices have risen substantially and many find it difficult to bridge the deposit gap given closer scrutiny of incomes and the application of stress tests. It is no surprise that first-time buyers are wrestling with putting down that 5 per cent deposit even at better loan-to-value rates.
Tightening the noose around a shrinking social sector and the private rental market will not solve these cost conundrums.
The Government needs to recognise that to achieve its ambition to boost homeownership it must ensure there are homes to rent at levels that allow households to save. It must rethink its housing policy and redouble efforts to expedite housing supply across all tenures.
Peter Williams is executive director of the Intermediary Mortgage Lenders Association