With the general election taking place a month today, the test of which party has a better plan for tackling the housing crisis and restoring the dream of home ownership is who will build more homes.
Labour has a better plan to get at least 200,000 homes a year built by 2020. This is backed by a new manifesto commitment of a new £5 billion Future Homes Fund to build 125,000 homes over the course of the next parliament for first time buyers.
The Future Homes Fund will be drawn from the investments of those who save money in a new Housing ISA. Unlike the Government’s ISA scheme which will simply stoke demand Labour’s plan will put the money to work by using it to invest in new homes prioritised for first time buyers.
This is part of Labour’s better plan, which will also instigate a major programme of reform of our housing market. Unblocking the supply of new homes by giving local authorities ‘use it or lose it’ powers, driving competition and backing small builders through our new Help to Build scheme, building more affordable homes by prioritising capital investment and getting a fairer deal for private renters by legislating for longer-term tenancies with a ceiling on rent rises over the course of those contracts, and banning rip-off letting fees charged to tenants.
The current Government has presided over the lowest levels of housebuilding in peacetime since the 1920s with home ownership declining to its lowest level in 30 years. Tory plans are to invest the lowest amount in affordable house-building for 14 years whilst spending £6.6 billion on schemes that will simply increase demand. The independent Office for Budget Responsibility estimates that average cost of a home will soar by £78,000 to over £363,000 – 14 times the average wage by 2020 under the Tories. In addition the number of families in the private rented sector who want to buy but are living on short term and insecure contracts, will increase by nearly 50 per cent to 4 million in the next Parliament.
The Government announced a First Time Buyer ISA in Budget 2015. Labour supports help for first time buyers to get on the housing ladder, but this must be done in a way that builds more homes rather than just stoke demand. This scheme will cost the taxpayer £2.2bn so Labour plans to put the money saved through these ISAs to work by using it to invest in new homes.
Savers will still be guaranteed the same return on their investment and be able to withdraw their money at any time. Any bank or building society which chooses to offer these ISAs will need to reinvest the savings into housing. We will create a Fund to reinvest in – which will be underwritten by extending existing government guarantees- so that savers are protected if their savings go into the Fund.
This will unlock an investment pot of over £5 billion in the next parliament. This will be used to pump prime investment in Housing Growth Areas – sites where local first time buyers will get priority over homes built. This will support 125,000 new homes and catalyse the development of sites that would not have been built out otherwise.