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Government's role in assisting first-time homebuyers

During the election, the Conservatives promised to enact Help to Buy, while Labour proposed distinct housing policies focuses primarily on social rent. Now that Labour is in power, Peter Hawley, director of SOWN, is voicing his opinions on the steps the party should take to aid new homebuyers....

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Government Assistance for First-Time Home Purchasers: Strategies to Consider
Government Assistance for First-Time Home Purchasers: Strategies to Consider

Government's role in assisting first-time homebuyers

In the ever-evolving landscape of the UK housing market, Shared Ownership has emerged as a popular product with great demand. However, more needs to be done at a government level to fully realize its potential.

The government's support for the Help to Buy scheme, which included a dedicated brand, effective information campaign, and website, has been evident. Yet, there is an urgent need for more support for first-time buyers, whether through Help to Buy or Shared Ownership. The omission of both from any major Labour housing announcements suggests that they are in danger of being overlooked.

Maria Ziegler's image is associated with this article, a testament to the growing importance of Shared Ownership in the housing sector.

Due to average house prices rising considerably more than average incomes, the impact of higher interest rates on mortgages, car and credit card loans, together with the cost of food and utility bills, many people can no longer afford to buy outright. Shared Ownership, therefore, presents a good alternative for these individuals.

Despite its popularity, Shared Ownership struggles with poor communications compared to Help to Buy. Myths surrounding the scheme include it being only available to people with low incomes, being unable to fully own a property, inferior quality properties, difficulty in selling, and being limited to flats. These misconceptions need to be addressed to encourage more participation.

The Shared Ownership scheme remains limited to those with a maximum household income of £80,000 (£90,000 in London). In 2021-22, 19,386 new Shared Ownership properties were delivered, which is the highest number since records began in 2014-15 and a 14% increase on the previous year.

The Labour Party currently supports promoting Shared Ownership as part of its broader strategy to increase affordable housing options and help new buyers, particularly those who struggle to save large deposits, enter the housing market. This support is reflected in their commitment to deliver a significant boost in affordable and social housing, including shared ownership schemes, as a pathway to homeownership.

Labour aims to increase the homeownership rate to 70%, emphasizing affordable, social, and shared ownership homes as essential parts of the solution. Their policies include reforms to accelerate homebuilding, a permanent "Freedom to Buy" mortgage guarantee scheme to help first-time buyers (including shared ownership applicants) secure mortgages even with smaller deposits. Shared ownership is recognized as a tool to support buyers by allowing them to buy a share of a home and pay rent on the remainder, increasing access to housing for those priced out of full ownership.

However, there is recognized criticism of the shared ownership scheme overall in the wider housing sector, with reports highlighting homeowners being "trapped" under current government shared ownership models, implying potential reform is needed for long-term viability.

In summary, Labour promotes Shared Ownership as a key element to support new buyers in conjunction with expanding affordable/social housing and mortgage assistance schemes, while acknowledging the need for systemic improvements in policy and housing supply to make these solutions effective.

[1] Labour Party Manifesto 2019: Homes for the Many [2] National Housing Federation: Shared Ownership - A Vision for the Future [3] Shelter: Shared Ownership - Time for a Reset [5] Labour Party: Homes for the Many - Shared Ownership Policy

Image by Maria Ziegler

  1. To bolster the potential of Shared Ownership in the UK housing market, the Labour Party has committed to delivering a significant boost in affordable and social housing, including shared ownership schemes, as a pathway to homeownership.
  2. Despite being a popular alternative for individuals who struggle to afford outright property purchases due to rising house prices and interest rates, Shared Ownership faces challenges related to poor communications and existing misconceptions that need to be addressed.
  3. The Labour Party has recognized the need for systemic improvements in policy and housing supply to make Shared Ownership and other affordable housing solutions effective, acknowledging criticism surrounding potential homeowner entrapment under current shared ownership models.

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