The government’s new Starter Home policy will help less than 5% of people renting, warns lobby group Generation Rent.
Only 200,000 households stand to benefit from the Starter Home scheme, out of 2.3 million private renters.
This is because after five years first-time buyers using the Starter Homes scheme to buy a newly-built home at a 20% discount would be able to sell it on at the full market price after five years.
Generation Rent said the average new-build home in England could be bought for £238,000 under the scheme, then sold for £379,000 after five years – with the owner pocketing £141,000.
The lobby group is proposing that Starter Homes are only resold to first-time buyers at the same discount the first buyer was offered and that they are only built in addition to – not instead of – affordable homes to rent.
Betsy Dillner, director of Generation Rent, said: “The government said its Starter Homes would be exclusively for first-time buyers, but by letting them vanish into the open market after five years, they’re betraying the millions who are stuck renting.
“A perpetual 20% discount would help multiple first-time buyers, instead of a jammy handful of winners in a multibillion pound raffle. While a household using the scheme couldn’t sell at the full market price they would be in a much better financial position than if they were still renting.
“The government should keep its promise to first-time buyers and build Starter Homes for the many, not the few – as well as homes for those who aren’t in a position to buy.”
In the Autumn Statement last year, Chancellor George Osborne pledged to build 200,000 starter homes with 20% discounts for under-40s by the end of the current parliament. The government has earmarked £2.3 billion for private developers, with property values capped at £450,000 in London and £250,000 in the rest of the country.
Analysis by Savills had revealed that starter home prices are out of reach for all people in need of affordable homes in 220 council areas and more than 90% in a further 80 council areas.
