Labour housing policy: help or hindrance for millenials?
If it gets into government, Labour pledges to build “thousands more low-cost homes reserved for first-time buyers”. The party would also guarantee Help to Buy funding until 2027.
Labour’s Shadow Secretary of State for Housing John Healey MP said:
“Labour would bring in a big New Deal for first time buyers including ‘first dibs’ on
new homes built in the local area and 100,000 new discount FirstBuy Homes which are priced at a level linked to local average incomes.” (Labour’s New Deal on Housing).
How exactly would a Labour government help first time buyers?
Labour intends that 20,000, of the new 100,000 affordable homes built each year, would be for first-time buyers. Depending on local property prices, discounts would range between 10-40 per cent.
The party would also “re-focus” the Help to Buy equity loan scheme so that it would only be available for buying first homes.
Would these Labour measures really benefit millenial first time buyers?
Firstly, how Labour’s level of home building would be funded is unclear. Some estimates suggest at least £7 billion in yearly grants alone would be needed to deliver 100,000 new homes each year.
The independent thinktank the Institute of Fiscal Studies analysed Labour’s spending commitments during the 2017 election and found although increased infrastructure spending could make the UK economy more productive, this would be undermined the party’s other measures. The IFS concluded that Labour’s proposed tax increases are unlikely to raise the £49bn Labour calculated.
Then there’s the commitment to guarantee Help to Buy funding until 2027 to give long-term certainty to both first-time buyers and the housebuilding industry. This scheme has been criticised for actually increasing house prices.
In 2017, Roger Harding, Director of Communications, Policy and Campaigns at housing charity Shelter, said:
“While a Help to Buy equity loan might help some first time buyers onto the ladder, in the short-term, there is a risk it will push up house prices, making it even tougher for others to buy a home in the future”