General debate on rural affairs
A general debate on rural affairs has been scheduled in the Commons Chamber for 11 November.
This House of Commons Library Briefing Paper describes the specific Government initiatives which have been developed in order to assist first-time buyers into home ownership and, in some cases, to help existing owners who are seeking to move. The paper includes some comment on these schemes.
Extending home ownership: Government initiatives (1 MB , PDF)
In 2019/20, 65% of households in England were homeowners. The rate of home ownership in England has declined from 71% in 2003 despite being the tenure of choice for most people. The 2014 British Social Attitudes survey found that, given a free choice, 86% would prefer to buy their own home rather than rent.
The decline in home ownership has been more pronounced in younger age groups: in 2003/04, 59% of households led by someone aged 25-34 were homeowners. This fell to 41% in 2019/20. Over the same period, the proportion of households led by a 35-44 year old fell from 74% to 56%.
Home ownership has become increasingly difficult to access, particularly for first-time buyers, as house price growth has outstripped the growth in wages. In 2019, the median house price in England was around 7.8 times higher than the median annual earnings of a full-time worker. The ratio has increased from around 5.1 in 2002. In London, the ratio in 2019 was considerably higher at 12.8.
The financial crash and the subsequent fall in house prices after the end of 2007 had only a limited impact on affordability for first-time buyers. Lenders have tightened their criteria for mortgage approvals and require buyers to have substantial deposits. Historically low interest rates have reduced the cost of mortgage borrowing in recent years, but the affordability of deposits remains a key barrier for first-time buyers.
This paper describes specific Government initiatives which have been developed to assist first-time buyers into home ownership and, in some cases, to help existing owners who are seeking to move.
Low-cost home ownership schemes have existed in various forms for many years. Commentators have generally supported interventions to support home ownership in challenging market conditions but emphasise the need for an overall increase in housing supply to prevent subsidised home ownership from adding to house price inflation. Concerns have also been raised about the effective targeting of such schemes and whether they provide value for money.
Initiatives to extend home ownership have been central to Conservative Governments’ housing policy since 2015. The focus on home ownership has been criticised by some for only benefitting those households that are already close to being able to buy their own home. Government funding for the Help to Buy: Equity Loan scheme is expected to total around £29 billion in cash terms by March 2023. The National Audit Office has highlighted that there is an opportunity cost to this funding, as it is unavailable for other housing schemes or priorities. Some commentators question whether the funding could be better spent assisting those with more pressing housing needs.
The current Government has said it wants to “turn Generation Rent into Generation Buy”. The following home ownership initiatives are already in place or being developed:
The devolution of housing policy to Scotland, Wales and Northern Ireland is leading to increasingly diverse approaches, in particular with regards to the Right to Buy policy. The paper provides a brief overview of Government home ownership initiatives in these areas.
Extending home ownership: Government initiatives (1 MB , PDF)
A general debate on rural affairs has been scheduled in the Commons Chamber for 11 November.
This briefing provides an overview of the housing support available to veterans across the UK.
Data on house prices, mortgage approvals and house-building.