Welsh Conservatives Debate: First-time Buyers

Welsh Conservative proposals to boost support for first-time buyers recognise that the benefits of a home-owning democracy coincide with the aspirations of the people of Wales. Wales has traditionally been a nation with high levels of home ownership, and we want to remove the obstacles that have developed, work with the whole market to develop a range of initiatives and provide first-time buyers with the help they need to access the property ladder. As the Council of Mortgage Lenders stated last month,

 The economy is recovering, with employment up, earnings growing, and competitive mortgage rates, so we expect activity to continue building as the year progresses.’

This dismisses Labour’s self-excusing amendment 1. Adults in Wales have a higher aspiration to own their own homes than anywhere else in the UK. A YouGov poll for the Council of Mortgage Lenders in 2013 found that 84 per cent of adults in Wales wanted to own their first property within 10 years, as opposed to 79 per cent across Great Britain.

There are currently only three Welsh Government schemes supporting home purchase in Wales. The homebuy equity loan scheme is the current manifestation of the low-cost homeownership scheme launched in 1995 by Tai Cymru in partnership with the Principality in south Wales and me in north Wales. It is the responsibility of local authorities to decide whether or not homebuy is a priority for the use of their social housing grant allocation from a Welsh Government social housing grant shrunken since 1999. This has supported the purchase of only 23 homebuy properties across Wales last year.

Under the Welsh Government’s Rent First scheme, local authorities are able to allocate funding through their social housing grant allocation, providing housing at an intermediate rent and giving tenants the opportunity to buy their home outright. Whenever we’ve requested information on the number of properties delivered by Rent First, the Welsh Government has told us that they don’t hold information on the take-up of this scheme, although we now understand that they’re expected to release an evaluation of Rent First tomorrow. Unfortunately, our debate precedes that. In contrast, under the Rent to Buy scheme in England, funding is ring-fenced. Housing associations and other providers can bid for a share of £400 million in low-cost loans to build up to 10,000 new homes in England between 2015 and 2018.

The Welsh Government were extremely slow to launch Help to Buy Cymru, modelled on the Help to Buy scheme in England, combining shared equity loan and mortgage guarantee options, enabling people to purchase their home with a minimum deposit of just 5 per cent. The UK Government’s decision to introduce a new type of capital funding that enabled policy lending for the Help to Buy scheme forced Labour Ministers to act in the interests of Wales after they’d failed to use funding in consequence of the previous FirstBuy shared equity scheme in England to help first-time buyers in Wales. In November 2012, the Welsh Government announced it would launch a NewBuy mortgage guarantee scheme, modelled on the scheme operated successfully in England, underwriting mortgages up to 95 per cent of mortgage value, but they had to shelve this three months later.

In England, Help to Buy has helped 88,000 households to buy their own home, compared to just 1,612 in Wales over the same period, barely one third of the level, although, thankfully, developers report to us that growth in that area is now picking up. Eighty per cent of the purchases in England and 74 per cent in Wales have been by first-time buyers. Help to Buy Cymru stimulates the construction industry and provides a key helping hand for those wanting to get on the property ladder. The UK Government has extended Help to Buy in England to 2020, and Welsh Conservatives would work with them to seek a similar extension in Wales, where this Welsh Government has so far only committed to an unspecified period beyond 2016. We’d welcome an announcement today that they will now match a UK pledge to 2020.

We would also look to extend Help to Buy to properties in need of renovation, helping to rejuvenate communities and stimulate local construction companies. It is over a decade since the sector collectively warned of a housing supply crisis in Wales. And the Homes for All Cymru manifesto, published last October, began by stating there is a housing crisis.

By 2009-10, the Welsh Government had by far the lowest proportional level of housing expenditure of any of the four UK countries and the 2012 UK housing review stated it was the Welsh Government itself that gave housing lower priority in its overall budgets. National House Building Council—NHBC—figures show that the total number of new homes built in Wales in 2012 was more than 50 per cent down on 2007 and that Wales was still lagging behind UK growth rates. NHBC figures also show that although new UK home registrations rose 28 per cent in 2013, Wales was the only part of the UK to see a fall, and although new homes registered in Wales did increase during 2014 to 4,740, fuelled, yes, by Welsh Government adoption of the UK Government’s Help to Buy scheme, this contrasts with the lowest figure of the nine English regions—5,296 in north-east England, with a smaller population, and with 11,003 in Scotland.

In 2010, a Welsh Government-commissioned review of house building stated that Wales needed 14,000 homes to be built every year between 2006 and 2026. However, the number of homes built between 2006 and 2012 totalled just 40,320—a shortfall of 43,680, the lowest level since the second world war. The total number of new dwellings in Wales in 2014-15 was just 6,170.

Last month, the Chartered Institute of Housing Cymru stated,

‘Wales needs to build 15,000 homes per year if we’re to stand a chance of ending the housing crisis within a generation. We’re calling on Welsh Government to continue to demonstrate their understanding that housing is critical infrastructure.’

Two new reports completed by NLP for the house building industry in Wales confirmed the link between market supply and housing market affordability, but state that their updated household projections for new dwellings between 2011 and 2031 indicate that the current level of housing delivery is only just over half of the identified housing need across Wales. As the HomeOwners Alliance has said, the decline of home ownership is having and will increasingly have profound long-lasting and adverse economic and social consequences. It increases poverty among pensioners, increases social problems for children, reduces living standards among lower and middle-income earners, pushes up the housing benefit bill and increases inequality. Reversing the decline in home ownership should be one of the Government’s highest priorities, they said.

The UK Government’s Help to Buy ISA will provide a bonus of up to £3,000 towards a deposit, helping home buyers across the UK. In Wales, council tax rates have rocketed 121 per cent since 1999, and people are paying more of their incomes on council tax than people in England or Scotland.

The Welsh Conservatives would give first-time buyers a six-month council tax holiday, saving the average band D household £663.50 and up to £817 in the highest council tax charging area of Blaenau Gwent. The Welsh Conservatives would scrap stamp duty for first-time buyers of properties worth up to £250,000, saving them an additional £140 on the average £132,000 first-home purchase in Wales and enabling savings of up to £2,500. These commitments are fully costed and would be funded with the sale of property owned by Welsh Government; sweating the assets to meet aspiration and drive growth.

The Welsh Conservatives would explore the development of a starter home Cymru initiative, following the lead set by the UK Government in England to deliver below market value properties specifically for first-time buyers under the age of 40. The Welsh Conservatives will also drive low-cost home ownership Cymru, enabling people in Wales to own their home. Working with the whole housing sector, we will seek to develop schemes such as rent to buy, referred to earlier, shared ownership, and mortgage guarantee, providing wider options that make home ownership more affordable and accessible. Mortgage guarantee schemes, after all, were the norm for decades before the end to boom and bust madness preceding credit crunch, and their absence helped drive the crash.

In order to maximise housing supply and meet wider needs, Community Housing Cymru are also keen to explore the further development of shared ownership schemes, popular in the 1990s, enabling people to purchase from as little as 25 per cent of their home’s value. Through building well-designed, affordable housing, more people in Wales will be able to access the property ladder in a way that best suits them, building on Welsh Conservative proposals outlined in our November 2013 ‘A Vision for Welsh Housing’ document. We need a whole-market solution to the Welsh housing supply crisis in social rent, low-cost home ownership and open market purchase. We must back first-time buyers and give housing a home in Wales once again, recognising, as the European Commission has recommended, the need to implement a comprehensive housing reform programme to increase supply and therefore make housing more affordable.