It’s housing white paper day, on which we finally learn all about Theresa May’s government’s big plans to solve the housing crisis. (Spoiler alert: they’re not that big.) It’s going to take a while to unpick that, though, so before we do, let’s take one last look at the last government’s record.
One of David Cameron and George Osborne’s signature ideas to help first-time-buyers onto the housing ladder was to, well, lend them money. The Help To Buy government equity loan covered up to 20 per cent of the value of new houses; it was meant to correct for the the fact that deposits had become so large that most young people could never realistically save them.
A second scheme, New Buy, was a government guarantee for mortgages of up to 95 per cent of the value of certain homes, in an attempt to get banks lending and (somehow, somewhere down the road) builders building.
This sounds great, right? Sounds like the sort of thing that’ll help people who aren’t inheriting mountains of cash to pull themselves onto the housing ladder, yeah?
Well, no. Check this chart from the Resolution Foundation. The blue bars are a little confusing – best I can tell, it’s cumulative, so the key should really say (e.g.) “up to £30,000”, as opposed to £20,001-£30,000. But the text makes things pretty clear:
The point is that the media household income of those who benefited from the two government subsidy schemes described above (the text in blue) is a good £10,000 higher than the median income of all households (the text in yellow). It’s nearly £20,000 above the average among those classed as low to middle income.
In other words, the Help To Buy schemes were never about helping poorer households at all. They were about bridging the gap for those who were already pretty rich.
Despite Cameron’s nonsense about “turning generation rent to generation buy”, it wasn’t really about helping the average 25 year old at all. Instead it was about locking up the votes of the sort of households that would, historically, have gone Tory, but might not in 2015 because they were angry about being stuck in overpriced private rental housing.
In some ways, this is unsurprising: Tory economic policy helps rich most, news at 11. And I probably wouldn’t whine too much if it weren’t for one thing: by pouring more money into the housing sector, it inflated house prices yet further. (So said Shelter in autumn 2015.)
That’s because it didn’t really achieve its other ostensible aim of increasing housing supply, because it never tackled the underlying reasons why housebuilders weren’t building more. “Lack of customers” was never the real problem for the housebuilders. “Lack of land” and “lack of competition” were.
Today’s white paper looks like it might tackle the latter of these problems, by encouraging SME builders back into the market. But it looks like the government has totally bottled it on the need to increase the land available for building. This is very unlikely to be the last Depressing Housing Chart of the Week around here.