Starter Homes scheme will fail, says Shelter

Controversial housing charity Shelter has published a report which claims that the government's Starter Homes scheme will fail the people it is intended to benefit.

The scheme, which was one of the Conservatives' key housing policies in the run-up to May's general election, pledges that 200,000 affordable homes will be built by 2020. 

The homes are intended for first-time buyers under the age of forty, who will be offered a minimum 20% discount off the market price. 

The charity's report claims that the housing programme, which will account for a substantial proportion of new homes supply during the next five years, will not help the majority of people on the new National Living Wage or average wages onto the housing ladder.

“The only group it appears to help on a significant scale will be those already earning high salaries who should be able to afford on the open market without Government assistance,” says Shelter.

Analysis in the report looks at different household formations in each local authority in England to determine what proportion of people would be able to afford a starter home. 

The report claims that the average family will be unable to afford a starter home in 58% of local authorities in England. It also states that families on the National Living Wage will only be able to afford a Starter Home in 2% of local authorities.

According to Shelter, London, the South East and the East have the lowest number of areas where affordable Starter Homes under the scheme's threshold could be built.

“Starter Homes will not be affordable for average working families across all of London and most of the South of England, the areas where housing is most unaffordable. Rather than replacing other forms of affordable housing like Shared Ownership and Social Rent, the new Starter Homes should be additional to them, as was suggested originally in the Conservative manifesto for the General Election but no longer seems to be government policy,” says Shelter on its website.

It argues that Starter Homes will primarily help only those on very high salaries or couples without children and has urged the government to rethink the policy before 'going down the wrong track'.

The report suggests that rises in property values over the next few years will push the average house price in some areas higher than the scheme's new home price thresholds of £450,000 in London and £250,000 in the rest of England. 

It says that in some areas, the current median house price with a 20% discount does not come under these thresholds. 

The report states that by 2020 there will be 80 local authorities where average prices will no longer be under the threshold. 

Commenting on the report, Labour’s London Assembly housing spokesperson Tom Copley AM said: "Shelter's analysis strongly suggests that the Government's new Starter Homes programme is doomed to fail. Not only will these new homes be unaffordable to working families on average incomes in the capital, the signs are that Government will raid the affordable housing budget to pay for them, resulting in fewer, not more, genuinely affordable homes being built.”

Adding: "Token schemes like this which appear to move pots of money around instead of actually increasing investment in housing, will not help. The government need to take the housing crisis seriously. That means properly funding Housing Associations to build social and shared ownership housing and removing the arbitrary cap on council investment in new homes. £450,000 homes which are unaffordable to the vast majority of the population are not part of the solution."

Last week the government reported that there were over 131,000 housebuilding completions in the past year, a 15% increase on the previous 12 months and the highest annual total recorded since 2009. 

Shelter's full report is here.