The over-inflated property prices we have suffered in the last couple of decades can be traced right back to the original right-to-buy schemes championed by Margaret Thatcher in the early 80s. Local authority housing stock was sold off at huge discounts to tenants on the basis that we’d all be ‘better-off’ if we owned our own homes rather than continuing to rent. It turned us into a nation obsessed by the concept of home ownership at any cost, and of making money from owning these homes.
But as we’ve seen in recent years, it’s not real money and it’s led to the current situation when millions can’t afford to move and millions more can’t access the finance they need to purchase somewhere to live. And at the same time there is not an adequate supply of good quality publicly owned housing available at affordable prices for those who can’t, or don’t want to, get on the housing roundabout.
George Osborne’s proposed extension of the existing Shared Equity scheme, now called Help To Buy, that the government introduced last year will no doubt be seen by some as a way of kick-starting a lethargic property market, but it has the potential to kick-start another round of increases in property prices.
It’s also difficult to see how it is going to cost the millions mentioned in the budget. The government is lending homeowners 20% of the purchase price in exchange for a 20% equity share in the property. Presumably they’ll take 20% of an inflated price if the house is sold. We were told on budget day that the loan is interest-free for 5 years but it now looks as though there could be fees to pay, maybe 1.75% initially rising with inflation after the first five years, so perhaps not as ‘interest-free’ as we first thought.
The last thing we need is another housing boom based on another Tory Chancellor deciding that we will be better off as a nation if we have the ‘right-to-own-our-own-homes’. A house is a place to live; it’s not a place to make money from. What we need is pressure on lenders to do their jobs and lend money. And money made available for new, affordable, housing for those who can’t buy to rent.