Property: The Key To 10 Downing Street?
The next resident of 10 Downing Street may find that a convincing housing policy was the key to electoral victory...
Pic Source: 10 Downing StreetThat, at any rate, is the view of the Council of Mortgage Lenders. In a new report they argue that the party most likely to help frustrated buyers get a first foot on the housing ladder will do best in the forthcoming election.
The three main parties all know this, of course, and will be insisting that they are the true guardians of Britain's home-owning democracy. But what are they offering the hard-pressed would-be owner? Here's a run through what they say they'll do.
Labour announced their future housing aims even before the announcement of the election, a sure sign of how central they view the issue to their bid for re-election.
What will they do? First and foremost, extend HomeBuy, an existing shared equity scheme which allows buyers to own a proportion of their home.
HomeBuy has been around since April 1999, the CML notes, its aim being to assist low-income households, namely social sector tenants and those on a local authority housing waiting list, into home ownership. Funding comes from the government and also, in some cases, from local authorities.
Labour's new suggestion is an expansion of the current HomeBuy scheme; in brief, they propose that people would buy a minimum of 50 per cent of the market value of the property (in some cases 75 per cent) and the rest would be made up through a combination of funding from mortgage lenders and the government.
They also plan to open up the scheme to three types of HomeBuy category:
Social HomeBuy - existing housing tenants would be able to buy 50 per cent of their home's discounted value, the rest would be funded by the local authority or housing association.
New-Build HomeBuy - aimed at key workers, existing social tenants, those on the housing register, and first-time buyers considered to be a priority by regional housing boards. Fifty per cent would be held by a housing association.
Open Market HomeBuy - aimed at the same groups as New Build, but a minimum of 75 per cent of the property's value must be purchased. The remaining 25 per cent would be funded by the government and the mortgage lender.
The Tories also aim to expand HomeBuy. Their plan is to extend it to newly built homes, recognising, says the CML, that a flaw in the present scheme is that it can only be used to buy existing properties. Extending it to new homes should help alleviate the shortage of affordable housing.
The CML believes that the Conservative policy document shares their own view of "the full potential of flexible shared equity" which could offer people the chance both to increase and decrease their share in a property - this is known as "staircasing" - depending on their circumstances.
The Conservatives are arguing that it costs half as much to subsidise a bought home as it does to provide social rented accommodation. They are pledging to give a "much greater priority" to shared equity within the housing budget to ensure its potential can be reached.
In regards to the current HomeBuy scheme, the Tories say that it needs to be "more affordable and more flexible". They suggest that "for the first five years the occupier could benefit from a larger equity loan consisting of two parts but with no initial interest charge for either.
"This would be charged at a low rate, possibly index-linked, and would be designed to break even over the life of the loan, after prudently allowing for equity growth."
The Lib Dems' housing proposals are based on a "mutual homes" model. The premise for this is that, instead of paying rent to a landlord, "tenant/owners" buy shares in a Mutual Home Ownership Trust (MHOT). When they want to move house they sell back their shares, thus providing equity for their new home.
The way in which this would work, say the Liberal Democrats, is that the Home Ownership Trusts would be formed by either housing associations, local people or councils, and these trusts would build, own and manage the homes.
The land on which the homes are built would be owned by a Community Land Trust (CLT). This would hold the public land subsidy which would make the homes affordable, and it would offer the land on long leases at low rates.People wanting to occupy a mutual home would pay a deposit, or small equity share, which would be around five per cent of the cost of building it, and would then make a monthly payment of around 30 per cent of their salary.
Although this payment would be rent, say the Lib Dems, it would contribute to the repayment of the communal mortgage, as well as a sinking fund and other costs. It would also earn shares in the Home Ownership Trust.
When householders wanted to move, they would sell back their equity based on an "agreed resale formula" which would be linked to the local housing market, allowing people to see their equity stake rise in line with local house prices.
Householders would have the option of selling their shares to either a new or an existing "tenant/owner" or back to the trust.
"The widespread consensus on encouraging the growth of shared equity is a welcome acknowledgement by all the main political parties that more needs to be done to help would-be first-time buyers surmount affordability problems and bridge the gap into home-ownership.
"Lenders welcome this, and the work that has been done so far by each of the parties to develop policy initiatives addressing the issues. Mortgage lenders look forward to continuing to explore innovative ways of providing funding for shared equity."