Osborne's housing plan won't help those stuck in the rental cycle

Updated
Autumn Statement
Autumn Statement



Housing, or rather the lack of affordable home, has become an issue of national importance, as a generation of people fail to get on to the property ladder thanks to rising house prices.

In the Autumn Statement, chancellor George Osborne set out a five-point plan to make housing more affordable for first-time buyers. This includes building 400,000 new homes, changing the rules on shared ownership, extending Help to Buy and rolling out a new London Help to Buy scheme, as well as – and this was the big one – charging buy-to-letters 3% more in stamp duty.
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All together, this sounds like a great plan: build more houses, give people more access to credit so they can buy the houses, and make sure landlords don't snap up the new properties first by penalising them with higher taxes.

Except, the chancellor did nothing to address rising rental costs in the UK that is the main barrier to homeownership.

Take London for example, which is the home of exorbitant house prices and rents.

London Help to Buy will mean buyers have to put down a 5% loan, the government will offer a loan of 40% (double the 20% offered by regular Help to Buy) and the remaining 55% is mortgage.

With the average London house price somewhere around the £500,000 mark, you still have to find a £25,000 deposit. That's a lot of money, and it still seems like a dream figure for those who are shelling out on average of £1,500 a month in rent.

Presumably, London Help to Buy will push house prices up further, as the original Help to Buy did, meaning that the policy is counter-intuitive. It pushes house prices up and therefore it pushes the deposits up.

On top of that landlords will be paying more for property and they will have to recoup that cost somehow, it is likely to be from the tenants.

So you're left with higher rents and higher house prices.

This plan would have been better if it was underpinned by greater legislation of the rental sector to ensure people don't see their rents rise every year by an exponential amount and can therefore save for their future.

We also have to remember that, despite the housing plan, many people still can't afford to buy homes and they deserve security of tenancy and of rental costs.

The housing plan is trying to put the property market right, but it won't work for everyone.

Stamp Duty Changes Come Into Force
Stamp Duty Changes Come Into Force

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