The Tory housing promise
The Conservative manifesto pledged to build 200,000 starter homes and 275,000 affordable units during the next parliament. It also promised that everyone who wants to own their own home should have the ability to access home-ownership. Champions of the Right to Buy scheme, the Conservatives plan to extend their policy of topping up deposits with government funds and to support savers’ efforts with the first-time buyer ISA.
Some 10,000 homes are also to be made available at sub-market rents to speed up first-time buyers’ saving potential. Add to this the intention to build starter homes specifically for first-time buyers and to sell them at a 20% discount, and it seems government support for getting on the ladder has never been so good.
Nothing for the Private Rental Sector?
For those in areas where both rents and capital values are rising quickly, these measures cannot come soon enough. Such policies will no doubt help thousands of first-time buyers to achieve their aim of being home owners during this parliament. With all the emphasis placed on home ownership, however, the conservative manifesto offered nothing for those who choose to rent or are unable to benefit from the first-time buyer options.
There will remain a large and growing section of society who will still not earn enough to meet lenders’ expectations of mortgage security. With capital values rising way ahead of wages, these people will not be able to save a deposit quickly enough to benefit in the next five years.
Assistance for first-time buyers should not be seen as the tap being turned off in the rental market. Quite simply, building at the levels the Conservatives aspire to and the prioritisation of first-time buyers for new houses will not eradicate the supply/demand imbalance. Indeed, if anything, the focus on new builds ignores the growing importance of the private rental sector (PRS).
Delivering additional new-build units, although needed, will not directly extend the supply to the PRS. Our latest Rent Check report found that only 8% of all private landlords looking to expand their portfolios would consider purchasing a new build property for the purpose of renting.
Mark Long is director of BDRC Continental