Last year research from the National Housing Federation found that 8.4 million people in England were living in an “unaffordable, insecure or unsuitable home”, prompting the government to say housing would be a “priority”.
Low supply, high prices and almost nonexistent real terms wage growth has made it even harder to get a foot on the property ladder.
What can be done to fix Britain’s housing crisis and what impact could that have on people on various stages on (or off) the property ladder?
The government’s new policy to fix the housing crisis is called First Homes, which they say will have “life changing” consequences for people trying to get onto the property ladder.
First Homes will cut 30 per cent off the price of certain homes for first-time buyers, with the benefit also extending to military veterans and people coming to fill important jobs in the local area such as nurses, teachers or police personnel.
If the buyer decides to sell up and move on then they would have to sell their house with the same discount to a local resident to avoid people buying the discounted properties and quickly selling them on for a significant profit.
The government expects “tens of thousands” of people will be able to take advantage of the policy to buy a home in their local area.
The policy is going through consultation so it will be some time before the finished article can come into effect but early details suggest councils will be able to apply a “local connection” test to prospective buyers to determine whether they are eligible for the discounted properties or not.
If the government is really serious about solving the housing crisis then it also needs to build far more houses than it has done over the past decade, with affordable housing being a significant part of the new housing stock.
The UK is going through a housing crisis but schemes like First Homes could help people afford homes in their local area and building more houses will mean people actually have more places to live.
The Counter Claim
However, research from Shelter found that even with the First Homes policy 96 per cent of average earners would still not be able to afford a house.
Many people who want to get a home of their own are private renters, almost two thirds of whom have no savings and cannot afford a deposit on a property that would already be very expensive.
There are also warnings that the prospective policy would put social housing at risk and make the situation even worse.
First Homes requires housing developers to cover the costs of cutting prices for certain properties by 30 per cent, but developers already have a planning system they use with councils to ensure a certain amount of affordable housing is built and infrastructure is constructed around it, called Section 106.
Between 40 and 80 per cent of the Section 106 money is expected to go towards First Homes if it launches, meaning there’s less available for building affordable homes.
If there are fewer affordable homes being built and the houses available under the First Homes policy are still out of reach to 96 per cent of average earners then the people in the most need of secure housing will be harmed.
The prospective policy could help those who earn above the average wage or have enough savings to afford a deposit, but paying for it from the same pot of money which goes towards building affordable housing could make things worse for those with below average incomes and no savings.
Affordable housing includes social homes, shared ownership schemes and affordable rent properties. Six out of 10 social homes are built using Section 106 money.
The average price of a newly built house in England is £314,000, meaning First Homes would knock £94,000 off the initial price.
The National Housing Federation report into the 8.4 million people in England living in an “unaffordable, insecure or unsuitable home” found that 3.6 million people were living in an overcrowded home while 2.5 million couldn’t afford their current rate of rent or mortgage.
A further 2.5 million people are living in “hidden households” they can’t afford to leave including house shares, living with parents or living with an ex-partner. 1.7 million are living in “unsuitable” homes, which includes the elderly in homes they can’t move around in and families in homes with no outside space.
Some 1.4 million are in poor quality homes which aren’t in a good condition for human habitation and 400,000 people are either homeless or at risk of becoming homeless as they sofa surf, sleep rough or live in temporary accommodation.
The government is now on housing minister number 10 in as many years, with Christopher Pincher replacing Esther McVey in the reshuffle last week. Long-term government plans are being hampered by the regular turnover of ministers.
A report from Shelter last year found that England would need three million new homes built over the next 20 years, while the Scottish and Welsh governments are committing more money to building new affordable houses.
One in 10 new homes built since 2013 have been constructed on land with a high risk of flooding, with over 84,000 new homes considered to be at risk from extreme weather the UK is currently experiencing with Storm Dennis.
A shortage of housing stock and a low number of new houses being built over a long period of time has contributed to the UK’s housing crisis and it will take a long time to compensate for years of issues.
By Joe Harker
Source: Kent Live