Stay where you grew up to get on the property ladder, new government proposals urge

Government plans to offer first-time buyers up to 20 per cent off their first home if they buy a property in the area where they grew up, have been rejected by experts as failing to “recognise the complexity of life”.

The proposals are the first test on housing policy for Prime Minister Boris Johnson’s government, which has said it aims to tackle the housing crisis and increase home ownership.

To achieve this goal, ministers also unveiled new plans for the shared ownership scheme, which allows first-time buyers earning less than £80,000 a year (£90,000 in London) to incrementally buy shares in a home and pay subsidised rent to a housing association, starting with the purchase of an initial share worth at least 25 per cent.

But critics called it a “worrying start” for the new housing secretary, accusing him of “pinning his hopes on yet another complicated” scheme and told him to “get building” instead.

“I want local young people, whether growing up in Cornwall or Cumbria, to be able to afford to stay in their communities,” housing secretary Robert Jenrick wrote in The Times, which reported a 20 per cent reduction would come at the expense of developers.

Experts said the proposal to incentivise people to remain in their community “doesn’t recognise the complexity of life” and would only help a small percentage for whom home ownership is just out of reach – but not the millions for whom it is a distant goal.

Shelter chief executive Polly Neate said: “We don’t think this plan will help people in the greatest housing need. There are 800,000 private renters in this country who can’t even afford to save £10 a month. What those people need is genuinely affordable social homes.”

While the 20 per cent reduction was not included in the Ministry of Housing, Communities and Local Government’s (MHCLG) statement, a spokesperson confirmed ministers were considering the proposals and said it would offer further details “in due course”.

The proposals that were officially announced by the government on Wednesday morning were met with mixed reactions.

Currently, those using the shared ownership scheme can only purchase their home in increments of 10 per cent, which can be prohibitively expensive, costing up to £45,000 each.

Under new plans, pending consultation, people would be allowed to buy shares of their house one per cent at a time.

But critics warned administrative costs involved in purchasing further shares – such as legal, mortgage arrangement and valuation fees – could render the proposal ”unworkable”.

The MHCLG said it wants to "make buying smaller chunks a simple, quick process that bypasses the current costly and sometimes lengthy valuations system" and will explore the best way to achieve this.

Mr Jenrick's department also announced it had closed a loophole allowing those using the Help to Buy scheme to take on a 35-year mortgage, which until ths week had been capped at 25 years.

This would make mortgage payments more affordable but leave people with greater interest to pay off in the long run.

Ms Neate instead urged the government to “get building”.

“Pinning his hopes on yet another complicated housing scheme is a worrying start for the new housing secretary,” she said. “The government must realise that unworkable schemes, laden down with admin costs, are the wrong priority at any time – and are woefully inadequate when this country is facing the current housing emergency.

“If the new government is serious about getting to grips with our housing crisis then it must follow through on its commitment to get building. That’s why we’re calling for 3 million more social homes over the next 20 years, to give more families the sort of step-up they actually need in life.”

The MHCLG also plans to increase the number of homes sold at discounted prices to people trying to get onto the property ladder and help build local support for new developments, Wednesday’s statement said.

But homeless charity Centrepoint said the proposed changes would “have little impact on the most vulnerable people in need of housing”.

The number of people sleeping rough in England has skyrocketed by 165 per cent in the last eight years, with a homeless person dying every 19 hours in the UK, data from the Museum of Homelessness suggests.

Centrepoint’s head of media and public affairs Paul Noblet said in light of increases in debt and the cost of rent, he welcomed any move by government to make home ownership more affordable.

“However, for the homeless young people Centrepoint supports, home ownership is not always a realistic or practical option – so the proposed changes will have little impact on the most vulnerable people in need of housing,” he said.

“To ensure that everyone can have a place to call home the government must ensure it focuses financial resources as much on increasing the supply of social housing as it does on home ownership.”

Mr Jenrick, 37, described his first major policy announcement as “radical”, saying: “Building the houses this country needs is a central priority of this government.

“We know that most people still want to own their own home, but for many the dream seems a remote one. My mission is to increase the number of homes that are being delivered and to get more young people and families onto the housing ladder, particularly those on lower incomes.

“That’s why I am announcing radical changes to shared ownership so we can make it simpler and easier for tens of thousands trying to buy own their own home.”

But Ms Neate suggested the government could learn from other countries to address the crisis.

She referred to schemes in Norway, in which people pay into a housing cooperative rather than making payments on their individual home to a housing association. This scheme negates some of the costs associated with purchasing new shares.

The MHCLG proposals underline Mr Johnson’s desire to shift from Theresa May’s focus on improving renters rights, to increase home ownership and give young people “a stake in society, the ability to own at least a share of their home”.

While Mr Johnson has stated an intention to build 300,000 new homes a year and make use of brownfield sites – former industrial or commercial lots – none of Wednesday’s policy proposals referred to the building of new houses.

A spokesperson for Labour’s shadow minister for housing said if homes aren’t being built, it doesn’t matter how large a proposed discount is.

Shadow housing minister Sarah Jones said: “Tinkering with the details of shared ownership is meaningless when lack of investment from government means low cost homes for ownership simply aren’t getting built. The Tories have failed to deliver the low-cost homes we need to get people on the housing ladder.”

Just one per cent of all homeowners have accessed shared ownership, while the number of these and other low-cost homes being built each year has almost halved since its peak in 2007/8, when 200,000 new homes were built.

However, director of policy and research at the National Housing Federation, Catherine Ryder, said: “We very much welcome the news that the government is looking at ways to make staircasing in shared ownership easier.

“Shared ownership is the best route into home ownership for people who can’t afford to buy outright and housing associations, who built 14,000 shared ownership homes last year, are committed to working with the government to continue improving it.”

The MHCLG has been contacted for comment.