We need council houses and rent controls
Katie Tulloch, Swansea and West Wales Socialist Party
Andy Burnham has announced the ‘Your First Home’ scheme, with the stated aim of reducing the difficulty of stepping onto the property ladder for first-time buyers. Under the scheme, first-time buyers of a new-build home, with a minimum deposit of 2.5%, can receive a 20% equity loan with an initial interest-free period. But will it solve the problems that the thousands of people whose sub-par housing situation comes with rent that eats up a larger and larger amount of our pay every month?
Upon closer inspection, ‘Your First Home’ appears to be largely a remodelling of then-Tory chancellor George Osborne’s 2013 ‘Help to Buy’ scheme, only with a lower minimum deposit and a fresh three-word designation.
In 2019 the National Audit Office found that Osborne’s scheme had failed to boost social mobility as nearly two-thirds of people who used the scheme could have bought a home without it and that: “the Help to Buy scheme led to an increase in prices in areas that were already relatively expensive, meaning properties in those areas remained too expensive for many.” The scheme did, however, have a positive impact on the financial performance of developers who saw an increase in revenues, profit before tax and profit margins.
Builders’ bonanza
This may be why RBC Capital Markets analyst Anthony Codling declared in response to Burnham’s announcement that “Christmas has come early for the UK housebuilders”. Construction companies’ share prices jumped accordingly after the announcement, anticipating future profits. While the government has said developers will be expected to make a contribution to the scheme, this cost will likely be passed on to homebuyers. The price of an average home may be pushed even higher than the current rate of at least seven times the median full-time annual salary.
Rather than reversing decades of underinvestment and under-construction of council housing, Burnham is recycling the policies of previous pro-capitalist governments which have driven the current housing crisis by subsidising inflated property prices for the benefit of greedy developers.
If Burnham was really committed to increased housing affordability and radical change, as he claims, the government must commit to the mass building of genuinely affordable, high-quality council housing. It is imperative that safe and secure homes be treated as a fundamental right, not an opportunity to pad the already inflated pockets of developers. Construction companies should be taken into democratic public ownership to address shortages in supply and drive prices down by flooding the market with high-quality council housing.
