A new review into home ownership is calling for the government to do more to help first-time buyers get a foot on the housing ladder.
The Redfern Review, led by Pete Redfern, chief executive of Taylor Wimpey, revealed that the financial squeeze on young people is “at the heart” of the decline in the number of home owners.
The fall in home ownership has been steepest amongst young people – over 20% in the past 12 years. This has been driven by rapid house price increases, the relative fall in incomes of would-be first-time buyers and their access to mortgage finance.
Redfern called for a long term, cross-party approach to housing issues so developers can safely invest in larger projects and in infrastructure.
The Redfern Review also proposed the establishment of an independent housing commission that would make recommendations on house price trends and the impact of policy changes on supply.
Pete Redfern, chief executive of Taylor Wimpey, said: “The detailed analytical work of the review reveals the challenges that young people face in buying their first home and highlights the impact on them of long-term falls in relative incomes and ability to borrow.
“We must focus on supporting today’s younger generation and creating a genuine long-term housing strategy independent of short-term party politics if we are to improve the position in a sustainable way for future generations.”
The Labour Party-commissioned review found that soaring house prices were not being driven by the lack of supply.
“New household formation and supply have been broadly in balance over the last 20 years and therefore the significant increases in house prices over that period have not been driven primarily by supply constraints,” the report said.
It found that the impact of new supply on house prices in the short term is very small.
By increasing home production to around 300,000 for one year would only reduce prices by only 0.6%, given recent rates of household formation.
The report also recommended a review of the Help to Buy and Starter Homes schemes to ensure that they deliver the best long-term result and “maximise their impact on home ownership”.
It suggested that Help to Buy needs to be refocused so that it is targeted more exclusively at first-time buyers and extended beyond 2021.
Starter Homes should also be retained on exception sites only and with the first-time buyer discount retained.
John Healey MP, the shadow secretary of state for housing, said: “At root, this decline in home ownership matters to me because it matters to so many people in this country that we are determined to serve.
“And it matters too because the shrinking opportunity for young people on ordinary incomes to own a home is at the centre of the growing gulf between housing haves and housing have-nots. Housing is at the heart of widening wealth inequality in our country.
“Labour is determined to get to grips with the falling number of home owners and this review gives us, and politicians of all parties, the foundation to do that.”
Andrew McPhillips, chief economist at Yorkshire Building Society, said: “We’re pleased to see that this report echoes our views on the difficulties facing younger people who want to buy a home.
“As it makes clear, addressing the supply of housing is a key factor over the long term.
“In the short term there are other measures which could help first time buyers, including making stamp duty a seller’s tax rather than a buyer’s tax to help reduce upfront costs.
“Our previous research found that this would save first-time buyers in the UK (excluding Scotland) an average of £3,971, with Londoners saving the most at an average of £13,171. Additionally, those moving up the ladder would save £4,154 on average, and £9,762 in London.
“Stamp duty is a significant burden for those looking to get onto the property ladder, adding to the overall difficulty of affording a home. Reforming the tax in this way should form part of the Government’s overall housing strategy, and would go some way towards helping more people to own their desired home.”
