Don't Panic

How I’d improve the housing market for first time buyers

Moving couple

This week the National Housing Federation forecast that home ownership in England will slump to 63.8% over the next ten years, that's the lowest level since the mid eighties. Lenders' requirements for huge deposits and the banks' reluctance to lend are some factors preventing first time buyers getting a foot on the property ladder. Despite this, prices may actually be rising due to a shortage of supply, thanks to successive governments not building enough homes.

Seven years ago Two Jags Prescott pledged to build starter homes that would be sold for £60,000 in a scheme that became known as Design for Manufacture, of the places that did get built none were ever available for that sort of cash, costing more like £250,000. The current government has its own initiative called FirstBuy, where they will work with house builders to provide £250m to help 10,000 first-time buyers raise deposits to buy homes.

The BBC quoted Campbell Robb from homeless charity Shelter as saying: "Homebuy can be a very positive experience but it helps less than 1% of all households in this country." He recommends releasing more land, a solution which the Housing Minister G

rant Schapps states is already happening; telling Radio 4's Today programme: "We are releasing enough government land to build Leicester twice over across the country — it is a massive programme." Is that big? It certainly doesn't measure up to an area of rain forest twice the size of Belgium.... more radical solutions are required.

Firstly let's force the state owned banks to lend. It certainly seems like a cruel irony that their reckless gambles on sub-prime mortgages contributed to the crash and now thatthey've been rescued by tax-payers money and are owned by the state we can't get them to lend to honest everymen who simply want to borrow to buy a place to live. Force them to lend Gideon 'George' Osborne and you just might kickstart a recovery!

Who is doing well out of this situation? I can tell you they were born after the Second World War and grew up during the 60s and 70s. They got a free university education with living expenses covered by a state grant. They bought their own house for a pittance and then sat back and watch its value rocket like an Apollo moon mission. They then used the equity to start buying up buy-to-let properties and now earn around £50k, as a kind of side project.

The worse thing about this class of propertied baby-boomer is they are now all for low taxes and cuts - having done so well out of a system that established them so comfortably. That is why they should be first up against the wall when the revolution comes, well before we'd get round to royalty or the aristocracy. In fact just before the bankers and the presenters of Top Gear (none of whom would be afforded the dignity of a clean death by firing squad.)

So secondly I'd raise income tax on rental yields and employ a whole new department at Customs and Revenue to pressure these propertied Kulaks into handing over much of their rental yields in tax, thus raising more revenue for home building and causing them to sell off a lot of their properties, ideally to their occupiers in a new, updated version of Thatcher's Right to Buy.

The problem with the current direction of travel is that if planning laws are relaxed (as looks likely) and more homes are built but without any restriction on the property vultures, first time buyers won't have the opportunity to buy as the pros will swoop in and buy them up 'off plan' before a brick has been laid, leaving us in the same predicament, but with less countryside.

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