Low cost housing the impossible dream?


Bernard Clarke of The Council of Mortgage Lenders questions how the UK can afford to provide affordable homes.


O


ne of many key questions the new government will have to answer is what it should – or perhaps more realistically what it can afford to – do to


promote low-cost home-ownership. By far, the most successful low-cost home-ownership initiative we have seen so far was the right-to-buy scheme. Although it had its critics, this initiative was – during its heyday in the 1980s – making subsidised owner-occupation a reality for considerably more than 100,000 households a year. Over a 25-year period, right-to-buy provided a low-cost route into owner-occupation for more than 2.2 million home-owners. Since the late 1980s, however, annual


right-to-buy sales have declined, although they still totalled more than 41,000 in 2005. But as the numbers have diminished, other low-cost home-ownership initiatives have been developed, driven by a desire to to provide wider access to the benefits of property ownership, against a backdrop of increasing owner-occupation, rising house prices and readily available funding.


38 SEPTEMBER 2010 PROPERTYdrum


At the last election the


Conservative manifesto aspired to a property owning democracy with everyone having the right to buy their own home.’


Since the onset of the credit crunch this


backdrop has become less favourable. Despite this, each of the main political parties has continued to support low-cost home-ownership. At the last election, for example, the Conservative manifesto aspired to a property-owning democracy with everyone having the right to own their own home. Labour wanted social tenants to be able to build up an equity stake in property, and the Lib- Dems favoured ‘equity mortgages’ to provide more affordable homes in rural areas. Now, the Coalition Government has published a draft structural reform plan, setting out its intention to develop options to help social tenants own all or part of their home. The reality is, however, that in the post-election environment there has been a greater focus on addressing the fiscal deficit. This has created a much more challenging funding environment for delivering any of the parties’ aspirations on low-cost home-ownership. Superficially, there is an opportunity for lenders to fill this gap. But they, too, are constrained by their own acute shortage of funding.


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