David Cameron has, as expected, announced the launching of a new scheme to re-start the housing market.
The PM has said that he wants everyone to have the chance to own their own home.
"I think it is vitally important that we build more houses in our country' he said as he pointed out that the average age of the first time buyer is now 37. And without quite alluding to a sort of wartime 'dig (build) for Britain' push, he said "We want to get Britain building".
Blaming the credit crunch for a 'stuck' housing market Cameron said that the coalition government now wants to 'unstick' it and get it moving again.
- Bring back 'proper' right to buy discounts so people can buy their council house.
- Use government backing to get banks to provide 95% mortgages for the buyers.
- Then use the money raised from the sale of council homes to build more homes.
- Use government land to build more houses on.
- Builders will build the houses and sell them then pay the government afterwards.
- Government will put money into builders' 'stuck sites' where banks won't lend to let them finish the building projects involving some 16,000 homes. Once again the government only gets its money back when the properties sell.
But why are we selling houses to people (council house tenants) that have already got the right to live in them? And why should they be made to feel that they 'have' to own their own house? If house prices and rents were more reasonable and the state pension larger then living in rented accommodation for life would not be an issue.
David Cameron is attempting to kick-start the economy by reigniting peoples' dreams of home ownership and the money that he hopes will be pumped back into the housing market
The government will back-stop this by supplying indemnity to high LTV mortgage holders and supporting lending to house building projects. To put it another way the government is removing the risk for the banks to lend to those they would not otherwise touch. Also, by increasing the right to buy discount, some of the social housing stock that does exist will be sold off cheap.
Pouring money into housing is what got us here in the first place! It's absolutely crazy that the country poured billions into the housing market and now we've nothing to show for it except for a shortage of housing!
There you have it; throwing money at housing does not work! Apart for the developers of course.
Shelter's chief executive Campbell Robb said: 'Whilst we welcome the government's commitment to tackle our housing crisis, today's announcement falls far short of the quarter of a million new homes we need each year just to meet demand. We are concerned that schemes to help first-time buyers and council tenants will simply encourage people to overextend themselves, while doing nothing to address the sky-high cost of housing.'
Green Party London Assembly member Jenny Jones said; "The solutions to this housing crisis are not complex, despite attempts to make them appear so. The problems we face have been created by underinvestment in public housing, subsidy for second home ownership, encouragement of buy-to-let investment, and overriding faith in the private sector housing market to solve all problems. The solutions are simply the opposite of the failed policies of the establishment parties – namely support for a massive programme of investment in public housing, an end to subsidy for empty properties and second homes, a rebalancing of housing to focus on homes for people rather than investment opportunities, and a balance of delivery mechanisms for affordable housing. Owner-occupied housing and council housing are not the only options, although both have their place – alternatives such as cooperatively run and owned housing also need to be explored and supported."
You can foresee that the next logical(?) step for the government to take would be to come up with an agreement along the lines of operation Merlin (lending to business) where banks are almost forced to lend for house buying and building.
Cameron may well be looking for a quick political fix but how many houses will actually be constructed as a result of this latest scheme? Ed balls, the shadow chancellor, calls the government scheme 'small beer'.
Unless huge numbers of houses are built and, just as importantly, in the right places many people will be driven into private renting with many ending up in sub-standard accommodation. If you doubt this then you need to see the Channel 4 Dispatches programme from earlier in the year.
Maybe what we need is a real 'build for Britain' scheme. Give anyone who is not currently a property owner a plot of land, some bricks and materials as well as access to trained builders and inspectors and help them build their own house. They only pay for it once it is properly built. Their deposit is the sweat of their own brows.