Ryan Bembridge analyses the plethora of schemes aimed at first-time buyers entering and leaving the dysfunctional mortgage market
Right to Buy
This lack of liquidity within the market hasn’t necessarily been helped by some government measures. One such policy is the extension of Right to Buy to housing associations, which is commonly credited for reducing the UK’s limited supply of housing stock.
“We are destroying the future routes into homeownership as we speak,” says Toby Lloyd, head of policy at Shelter.
“Social housing traditionally provided not a direct route to homeownership through Right to Buy, but an indirect route by giving people a secure period of low rent so they can save up to buy a home at some point in the future.”
He thinks it harms potential first-time buyers in the capital the most.
“How to increase supply in London?” he asks. “Firstly what you don’t do is decimate the existing stock of affordable housing. I can’t see for the life of me how that is going to improve anything for housing in the capital, so firstly you must not allow the forced sale of council housing on the open market.
“Especially in London – doing that means investors in private rental sector housing letting property back to exactly the people who are desperate for council housing at three times the rent and three times the benefit bill. This is just madness.
“The very first thing we need to ensure is that any council houses that are sold are replaced like for like, it’s no good to saying they’ll replace them with something completely different later.
“You cannot sell a four bedroom family social rented house in Tower Hamlets and say it’s being replaced because you might build a one bedroom studio private flat in Hull 10 years later – that is simply not replacement, and that is literally what is being offered at the moment.
“We need a London ring fence otherwise this policy will see a huge outflow from London to fund the Right to Buy elsewhere round the country.”
Rather than allow the public sector to contract Boulger says now would be a good time to build more homes.
“If somebody in the public sector - whether a housing association or council - could borrow at low rates and rent it out that would make more sense.
“The cost of borrowing money is low for the government so if there was a time for the public sector to build to rent out, now would be the time.
“Local authorities and housing associations would be betteroff doing that, though localauthorities can borrow more cheaply than housing associations.”
Jeremy Leaf adds: “Local authorities should be under a stricter obligation to spend the proceeds of Right to Buy on additional affordable housing at least on a one-for-one basis.”
