Housing plan has yet to bear fruit
A July 2023 report by the Commons Housing Committee found that the UK Government is not expected to meet its commitment to deliver 300,000 new homes every year by the mid-2020s. The latest available Office for National Statistics figures show that in the year to March 2023, 210,320 dwellings were completed in the UK.
Also in July 2023, Rt Hon Michael Gove MP, Secretary of State for Levelling Up, Housing and Communities, launched his long-term housing plan, promising to ‘unleash’ building on underused sites, clear planning bottlenecks, and regenerate 20 towns and cities, including building thousands of new homes.
Planning policy is the key lever
Propertymark has repeatedly called for reform to simplify the planning system to speed up homebuilding and boost supply.
New laws came into force on 26 October 2023 to speed up the planning system, hold developers to account, cut bureaucracy, and encourage more councils to put in place plans to enable the building of new homes.
Announcing an updated National Planning Policy Framework in December 2023, Micheal Gove set an expectation that every local authority will have up-to-date 5-year plans in place, although stopped short of making homebuilding targets mandatory.
Experts urge caution
Creating a sudden jump in demand with easy access to mortgage lending before delivering more homes risks further driving up prices, leaving aspiring homeowners back in a similar position of not being able to afford monthly repayments even if they have a deposit.
There have also been concerns raised that a scheme of this type has the potential to result in a 2008-style housing bubble, with young buyers taking on large debts that ultimately become unaffordable. And if the UK Government succeeds in tackling the undersupply of housing, causing lower house prices, there is a real risk of people falling into negative equity.
What would a new scheme look like
Ministers have some recent templates to work with. The Help to Buy scheme, which ran between 2013 and 2023, saw the UK Government offer 20% equity loans and back 5% deposits to boost homeownership at new-build developments.
Although much smaller in scale, the mortgage guarantee scheme– set to run until 2025 – is also aimed at boosting the number of 5% deposit deals available with lenders. The UK Government backs a portion of any mortgage offered under the low-deposit scheme, so it is willing to compensate the bank or building society if a home must be repossessed.