1 The impact of assistance on local
housing markets
1. In recent years the number of people owning their
own home has increased greatly. Currently, 70% of households in
England are home-owners, compared to 61% in 1984.[2]
The Government aspires to increase this still further to 75%,
while 90% of householders would prefer to own their own homes
if they could.[3] The supply
of available housing has however failed to keep up with this increase
in demand, resulting in house prices rising at a greater rate
than increases in average earnings. Consequently, more people
are finding it difficult to purchase their own home, especially
those attempting to buy for the first time.
2. To help address this problem, the Department for
Communities and Local Government (the Department) provides financial
assistance, via Registered Social Landlords, to those who would
otherwise be unable to buy their own homes, by means of two main
products—shared ownership and equity loans. In the standard
versions of the two products, priority was given to applicants
who were in social housing or on housing waiting lists. There
were also special versions of both for certain public service
workers in London, the South East and East of England under the
Key Worker Living Initiative. In April 2006, the Department merged
the range of existing products into a single, new HomeBuy Programme
(Figure 1 - see overleaf) while streamlining procedures
to ensure people are treated more consistently and fairly.
Figure 1: The Department merged the low cost home ownership products into a single programme from April 2006
Source: Department Consultation Paper "HomeBuy—expanding
the opportunity to own", April 2005
3. The Department has spent an increasing share of
its total support to the affordable housing sector on low cost
home ownership assistance, from 13% in 1999-2000 to almost 30%
in 2004-05.[4]
It has provided assistance to 40,000 households between 1999 and
2005 and plans to help a further 100,000 households between 2005
and 2010. This planned increase in provision is still insufficient
to meet demand which has been estimated at 60,000 households a
year.[5]
4. Given that demand for assistance outstrips availability,
it is important that the assistance is properly targeted. Proper
targeting requires sufficient knowledge of their local housing
markets on the part of Registered Social Landlords, who administer
the assistance, to ensure help goes to where it is most needed.
Housing markets can vary greatly however even within the same
region.[6]
There have been problems in some areas selling new shared ownership
housing for key workers because properties have been the wrong
type, built in the wrong locations, or poorly marketed.[7]
5. To make it easier for people to access this assistance
and to ensure greater consistency in the treatment of people's
applications, the Department extended the system of HomeBuy Agents
across England in April 2006. These Agents now form a single point
of contact where people are able to obtain information about all
the low cost home ownership assistance available in their area.
Agents' success in this role will depend on how well they liaise
with Regional Housing Boards, local authorities, and the other
Registered Social Landlords who are offering low cost home ownership
assistance in their area to ensure that they have the necessary
detailed understanding of the local housing markets and of the
assistance available in their areas. There is however a risk that
some Agents are covering too wide a geographic area to have the
necessary detailed understanding.
[8]
6. Good knowledge of local housing markets is important
as there is a risk that if misdirected, low cost home ownership
assistance can make homes even more unaffordable by increasing
demand in property hot-spots, or in sectors of the market where
demand is already high, so pushing up house prices. The impact
of the assistance on house prices at a national level is likely
to be small, as low cost home ownership sales represent only 1%
of all house sales nationally, but they are more significant for
first time buyers where they represent 4% of all purchases. While
the numbers of first time buyers helped in the Midlands are too
small to have an inflationary impact, low cost home ownership
purchases represented 7% of all purchases by first time buyers
in London.[9] The risk
of the assistance impacting adversely on house prices is likely
to increase in the future as the Department is planning to increase
the numbers of people it will help.[10]
7. Low cost home ownership can continue to have an
impact on local housing markets even after the initial purchase
of a property. Once they have made their initial purchase, low
cost home owners can subsequently choose to increase their share
of their property, buy it outright, or sell up and move on. If
the owner decides to sell their share of a New Build HomeBuy property,
the Registered Social Landlord has the right to buy back this
share or nominate another buyer from the housing waiting list.
The Department and the Housing Corporation do not know how long
people tend to stay in these properties, the size of the share
purchased when owners do decide to increase the share they own,
or the extent to which these properties are bought back by Registered
Social Landlords, although the Housing Corporation is intending
to collect information from Landlords on the extent to which they
buy back their share.[11]
2 Department for Communities and Local Government:
Table 801-Household characteristics: Tenure trend. Back
3
C&AG's Report, paras 1 and 2; Qq 11, 130 Back
4
C&AG's Report, para 4; Q 129 Back
5
C&AG's Report, para 12; Qq 12, 14, 127 Back
6
Qq 2, 12, 36 Back
7
C&AG's Report, para 29; Q48 Back
8
C&AG's Report, paras 7, 21; Qq 95-99 Back
9
C&AG's Report, paras 13, 19; Qq 14-16, 81, 82 Back
10
Q 37 Back
11
C&AG's Report, Recommendation 5; Qq 17-19, 41, 149; Ev 19 Back
|
