Chancellor’s “bold plan” to save home ownership written off as a damaging non-starter

Labour’s shadow housing minister John Healey has effectively called George Osborne’s “bold plan” to deliver more homes a sham.

In his Autumn Statement yesterday, the Chancellor declared he was doubling the housing budget and promised “400,000 affordable new homes”, as well as removing restriction on shared ownership. But Labour said these plans are already “unravelling”.

“The bluster of George Osborne’s statement masks the reality that his housing pledges are actually a huge cut in investment compared to the plans he inherited from Labour and that most of the so-called ‘new homes’ he has announced [yesterday] have already been committed,” said Healey.

Furthermore, many of these new homes are not actually new, the shadow minister said – with 250,000 of them already previously committed. Nor will the affordable homes be that affordable either.

As for the so-called Starter Homes offering first-time buyers under 40 the chance to buy a home at an 80% discount off local market rates, Healey suggested such first-time buyers could require incomes of £100,000. And citing research by Shelter, he said that shared ownership properties could be unaffordable to more than half of all landlords across the country.

“After five years of failure from the Tories, with home-ownership having fallen each and every year since 2010 and house-building down to its lowest level since the 1920s during George Osborne’s time at the Treasury, we needed much better from the Chancellor,” Healey added. “Labour will continue to press the Government to build more homes that are genuinely affordable to young people and families on ordinary incomes, to rent and to buy

Meanwhile, the Joseph Rowntree Foundation (JRF) has expressed its concerns over the Chancellor’s housing package – warning that it fails to address the housing needs of the many households who will not be able to access home ownership even with Government assistance.

“We are of course pleased to see that George Osborne has responded to concerns about Tax Credit cuts and a lack of affordable housing in today’s speech. After taking steps to tackle low pay with the National Living Wage in the Summer Budget, it’s good to see that the Chancellor is now providing extra money for house building. However, focussing Government support only on homes for sale will do nothing to help anyone who is not able to save a deposit or get a mortgage,” said the organisation’s chief executive, Julia Unwin.

“Even so-called ‘affordable’ home ownership is out of reach for low earning households – fewer than three per cent of new social tenants could afford a starter home or shared ownership property.

“Cancelling the Tax Credit cuts will be welcomed by low-income working families in the short-term. But many working families will still find themselves worse off due to upcoming reductions to Universal Credit. By 2020, families with children will be better off only if both parents work full time on the National Living Wage – something only a small minority of families can manage.

“While allowing up to £2bn more for social care will help to ease the funding shortfall in some regions, choosing to do this through Council Tax will risk creating a two-tier system where good care is only available in wealthier areas or to those who can pay for it.

“To create a long-term, sustainable path towards a prosperous and poverty-free UK, businesses, employers and local leaders must work with central Government to tackle low wages, high costs and create more genuinely affordable housing to rent as well as own.”

Campaign group SHOUT – Social Housing Under Threat – was unimpressed with the Chancellor’s housing plan, saying in a statement on its website that it fears “short term presentational success may be the most successful feature” of the Chancellor’s Spending Review.

Osborne’s figure of 400,000 new homes amounts to 80,000 homes a year, the campaign pointed out, adding that even if these homes were additional to the 120,000 or so that are currently being delivered, it still adds up to a shortfall from the minimum 220,000 homes that need to be built a year up to 2031 to begin addressing the housing crisis.

The Chancellor’s plan to help people to buy “won’t actually do much to reverse the decline in home ownership over the last 10 years” according to SHOUT’s assessment. Indeed, his approach would leave around 8 million households as renters at the end of the programme.

“On some (generous) assumptions, it would shift the proportion of owners from the current 63% of households to between 64% and 64.5%. At that rate, it would be 20-30 years before we get back to the 70% in owner-occupation at its peak just after the millennium,” SHOUT said. “Second, millions of households can’t afford to buy, even one of the lower cost home ownership products which the Chancellor’s plans are intended to produce.”

David Orr, chief executive of the National Housing Federation (NHF) was a little more welcoming, describing the Chancellor’s announcements as providing the “conditions for us to deliver thousands more homes for people at every level of the housing market”.

“We are delighted that the Government wants to boost shared ownership,” he said. “Shared ownership is a housing association success story – with over 275,000 properties already delivered. The scheme is already incredibly popular and this investment, alongside the removal of local restrictions, will mean housing associations can help many more aspiring homeowners achieve their dreams.

“The upfront investment in Starter Homes should help make their delivery more viable and likely. Whilst it is vital they don’t come at the expense of traditional affordable homes, for sub-market rent and shared ownership, this measure could help incentivise housing associations to deliver them alongside homes to rent.

“Housing associations already build tens of thousands of homes for social and affordable rent each year. As well as helping the Government boost homeownership, the sector remains committed to building homes for affordable rent to meet needs of people on all incomes.”

When it comes to the pilot programme Osborne announced to trial the extension of Right-to-Buy to housing association tenants, Orr added: “It is only right and proper that the extension of Right to Buy to housing associations is tried and tested before it is rolled out more widely. We want this scheme to work both for tenants with home-owning aspirations and for housing associations building replacements – piloting it will ensure it delivers this.”

Orr had a few concerns when it came to some of the welfare changes, notably the setting housing benefit for new social tenants in line with Local Housing Allowance (LHA) payable to private rented sector tenants.

“We understand the need to bring down the housing benefit bill, but are concerned about the impact on the day to day lives of those who will be affected – many of whom will be housing association tenants,” he said. “Our belief remains that the best way to tackle the housing benefit bill is to build homes for social and affordable rent. We are awaiting further detail to clarify if this applies to specified accommodation. If it does, we would be deeply concerned.”

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