The need to fill the void in the aftermath of Help to Buy

As the Budget approaches and the housing crisis intensifies, it is important to consider what the Chancellor could – and should - do to support those currently unable to get onto the housing ladder.

In 2022 the Government ended the Help to Buy scheme. Admittedly it had attracted some controversy, but the absence of Help to Buy has been felt very strongly. The scheme, which enabled buyers to own a homes with just 5% as a deposit (using an equity loan worth 20% of the price of a new build home; 40% in London), enabled the purchase of almost 390,000 new build homes.

In July last year, figures from Barratt showed that the number of first-time buyers acquiring its homes had fallen by 49% in the year following the cessation of Help to Buy, and Barratt predicted a drop of 23% in build volume over period July 2023-24.

This shortfall, coupled with a challenging market, has led many to ask the question, what can fill the void left by Help to Buy?

Shared ownership is part of the solution, but in our sector, demand continually exceeds supply.

Financial demands

Overall, housebuilding slowed down in 2023. More than half a million new developments have been put on hold during the past five years and official data shows that only 19% of planning applications are processed within the recommended 13 weeks, compared with 57% a decade ago.

Because around half of new affordable housing (which includes shared ownership) is delivered through conditions imposed on development through ‘planning gain’, the reduction in housebuilding results directly in a reduction in shared ownership properties. 

And as the already acute need for affordable housing increases, the planning system alone cannot keep up with the volume of new homes required. This may be exacerbated if the proposed Infrastructure Levy is introduced, because it would result in planning gain revenue becoming available for local authorities to spend on the many wide-ranging financial demands that they face in addition to housing.

Against the odds, the shared ownership sector has made considerable progress in meeting demand. In 2021-22, according to the English Housing Survey, 19,386 new shared ownership properties were delivered. This is the highest number since records began in 2014-15 and a 14% increase on the previous year.

But there is an urgent need for more shared ownership properties, and one which is growing.

Traditionally shared ownership was most popular among those aged between 25-35 (32-37 in London) but the upper age is increasing. Today first-time buyers are paying almost a third more to get on the property ladder than they were five years ago and in the last decade the number of private renters moving into home ownership fell by 23%.

Opportunity is clear

Although shared ownership remains limited to those with a maximum household income of £80K (£90K in London), many people are finding that due to average house prices rising considerably more than average incomes, the impact of interest rates rises on mortgages, car and credit card loans together with the cost of food and utility bills, they can no longer afford to buy outright, and shared ownership is a good alternative.

The Government must get behind shared ownership in the same way it did Help to Buy and Wednesday’s Budget is the opportunity to do so.

The opportunity is clear, and not necessarily expensive: Help to Buy benefited from a dedicated, widely recognised brand with an effective information campaign and website which pointed would-be purchasers in the direction of suitable products. There are many myths around shared ownership which need to be addressed (for example that shared ownership is only available to people with low incomes or those on social housing lists; that you can never fully own a property through shared ownership; that shared ownership properties are of inferior quality compared to properties sold on the open market; that It's difficult to sell a shared ownership property, or that shared ownership is only available for flats… the list goes on) – but doing so would take a government-led, national initiative.

Helping first time buyers and others to get on to the property ladder is vital not only for the individuals involved but for the country’s social and financial prospects. Shared ownership is a great product and there is great demand for it – but more needs to be done at a government level to fully realise this potential.