Labour launches New Deal to fix the housing crisis

Labour Leader Jeremy Corbyn and Shadow Secretary of State for Housing John Healey will today (Monday 5 June 2017) launch ‘Labour’s New Deal on Housing’ – the party’s long-term plan to fix the housing crisis. They will promise to give priority to those let down most by failings in the housing market and in Conservative housing policy.  

Setting out more detail on the Party’s plans to deal with the country’s housing crisis and build at least a million new homes, the published plan will include: 

• A New Deal for first-time buyers on ordinary incomes, including 100,000 new discounted FirstBuy Homes, a two year stamp duty holiday for first-time buyers, and an extension and re-focusing of Help to Buy so that it is only for first-time buyers;
• A New Deal for those 1.2 million on council waiting lists with a huge increase in affordable housebuilding to be building 100,000 genuinely affordable homes a year by 2022, including the biggest council housing programme in over 30 years;
• A New Deal for private renters with a consumer rights revolution including three-year tenancies with an inflation cap on rent rises and new minimum property standards.

   Labour will also criticise Conservative Minsters for “seven years of failure” on housing, and highlight that since 2010 we have seen:

• Housebuilding at the lowest level under any political party in peacetime since the 1920s;
• The lowest level of new affordable housebuilding in 24 years;
• Almost 200,000 fewer home-owners, with 900,000 fewer under 45s owning their own home;
• Rents rising faster than incomes for many;
• More families forced into temporary accommodation, with 120,000 children spending last Christmas without a home of their own; and
• Rough sleeping homelessness more than doubled.

   Jeremy Corbyn, Leader of the Labour Party, said:

   “A Labour government will start on fixing the housing crisis immediately. High prices, excessive rents and the chronic lack of affordable housing are ruining the lives of young people, families and aspiring homeowners.

  “As part of our massive housebuilding commitment, Labour will ensure 100,000 FirstBuy Homes are available at discounted rates to local first time buyers. This will transform the housing market and put the needs of younger house buyers and local workers first.

  “Labour will usher in a new era in council housebuilding to build more council homes than at any time for over 30 years so that the broken market is fixed to provide homes for the many, not investment opportunities for a wealthy few.”

   John Healey, Labour’s Shadow Secretary of State for Housing, said:

  “After seven years of failure, the Conservatives have no plan to fix the housing crisis and Theresa May only offers more of the same. Labour offers a New Deal on housing between the people of this country and a new government. It is a bold, long-term plan for housing to help those being let down most by a broken housing market and failing Conservative policy – young first-time buyers, private renters and people needing new social rented homes.

  “Our first Labour housing priority will be help for young first-time buyers. Under the last Labour government, a million more families became home-owners but now the Tories are failing first-time buyers on middle incomes. Under the Conservatives since 2010 homeownership has fallen by 200,000 with younger families on ordinary incomes the hardest hit.

   “Labour’s new FirstBuy Homes will give aspiring first-time buyers on ordinary wages who’ve been failed for the last seven years hope that things can change.

   “After seven years of failure, a Labour government will shift the housing market decisively towards first-time buyers on ordinary incomes.”

   Ends

   Notes to editors

• ‘Labour’s New Deal on housing’ will be launched today (Monday) by Jeremy Corbyn and John Healey.
• More than two-thirds of people now believe there’s a housing crisis, and Labour has a strong lead as the best Party to handle the housing crisis: [https://d25d2506sfb94s.cloudfront.net/cumulus_uploads/document/mdbxkz6bif/YG%20Trackers%20-%20Best%20Party%20On%20Issues.pdf]

   

  The Conservatives’ seven years of failure on housing

   

• The need for change on housing follows seven years of Conservative failure:

  -          lowest average level of housebuilding of any governing political party in peacetime since the 1920s;

  -          new affordable housebuilding at a 24 year low;

  -          almost 200,000 fewer home-owners;

  -          rough sleeping more than doubled;

  -          rents risen faster than incomes for many;

  -          £4bn a year higher spending on housing benefit.

   

• The Conservative failure on home-ownership is particularly stark. After a million more families became home-owners under Labour, the rate of home-ownership has now hit a 30-year low under the Conservatives. Official figures show that younger households on ordinary incomes have fared worst since 2010 – the number of households under 45 who own a home has fallen by more than 900,000 since 2010 [https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/595786/2015-16_Section_1_Households_Annex_Tables.xlsx]

   

• At the same time, government data also shows that the number of new low-cost homes for first-time buyers has fallen by 66 per cent since 2010. Overall, the number of new affordable homes is at a 24 year low [https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/595369/Live_Table_1000.xlsx]

   

• The Conservatives have given up on first-time buyers - their manifesto makes no mention of ‘first-time buyers’ at all, and they have dropped their 2015 manifesto promise to build 200,000 ‘starter homes’ for first-time buyers.

   

• John Healey previously commissioned and published the independent Redfern Review into the decline of home-ownership, the  first major review of home-ownership in a decade and called reversing the decline in home-ownership “Labour’s first housing priority”. [http://www.redfernreview.org/]

   

  Labour’s New Deal on housing

   

• Labour’s detailed housing programme – ‘Labour’s New Deal on housing’ – is the most ambitious plan for housing in more than a generation. The 20 page plan sets out a series of six ‘New Deals’ where the housing market and housing policy are failing, and shows how Labour will do things differently.

   

• Labour’s New Deal for first-time buyers sets out a plan to help reverse the decline in home-ownership under the Conservatives, with a new class of FirstBuy Homes linked to local average incomes, ‘first dibs’ for local buyers on newly-built homes, a two year stamp duty holiday for first-time buyers purchasing properties up to £300,000 and a 10-year extension of Help to Buy, but targeted in future only on first-time buyers.

   

• Labour’s New Deal for homeowners sets out plans to strengthen the safety net for homeowners who fall ill or lose their job with a new Homeowner Guarantee as well as action to insulate new homes and protect those who own their home on a leasehold basis from rip-off rises in ground rents.

   

• Labour’s New Deal on housebuilding sets out the pledge to build at least a million homes over the next Parliament, and a new aim by 2022 to reach and then maintain housebuilding at 250,000 new homes a year throughout the following five-year Parliament. These targets will be driven by a new Department for Housing with Ministers monitored at each step by a new OBR-style Office for Housing Delivery.

   

• Labour’s New Deal on affordable homes sets out a plan to build at least 100,000 genuinely affordable homes to rent and buy by 2022, including the biggest council house building programme for more than 30 years. Labour’s affordable housebuilding scheme will also bring back funding for social rent, as well as low-cost homes to buy including FirstBuy Homes and shared-ownership.

   

• Labour’s New Deal for private renters sets out the commitment to England’s private renters to give them proper consumer rights and protections, including new minimum property standards that landlords must meet, three-year tenancies with an inflation cap on rent rises, and legislation to ban lettings fees.

   

• Labour’s New Deal on homelessness sets out a plan to end rough sleeping within the next Parliament starting by making an extra 4,000 homes available to those with a history of rough sleeping, and tackling the wider of wider homelessness.

   

  Help to Buy

   

• The most recent Help to Buy figures show that one in five recipients are not first-time buyers and that almost 4,000 households on incomes of over £100,000 have benefitted from the scheme [https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/604275/Help_to_Buy_tables.xlsx]

   

• Under Labour’s proposals the Help to Buy equity loan scheme would be extended beyond its current end date of 2021 to 2027 but would only be open to first-time buyers with household incomes of less than £100,000.

   

• In return for this long-term certainty, Labour would seek a wide-ranging partnership agreement with the housebuilding industry to build more homes.

   

  First dibs

   

• Under Labour’s ‘first dibs’ proposals, first time buyers that live or work in an area will have first call on up to half of all the homes built in their area. We will change national planning policy to give councils the power to reserve a share of the homes built for local first time buyers as a planning condition. Developers will be required to market their homes to local first time buyers whilst they are building and these homes will be reserved for a period after completion to give first time buyers the chance to put in first dibs.

   

  FirstBuy Homes

   

• FirstBuy Homes would be part of Labour’s New Deal on affordable homes. They are a new class of discounted home for sale, reserved for first-time buyers and priced in reach of those on ordinary incomes.

   

• Under the scheme, ‘benchmark’ prices for FirstBuy Homes would be set for each local authority area. They would be set so that average mortgage payments do not exceed a third of average household incomes in the local area. This means the level of discount will vary from area to area, and in some places could mean first-time buyers get up to 40% off the normal market cost of the home, pricing in local people who otherwise wouldn’t have a chance to buy. Any buyers would have to meet the normal checks by lenders to ensure they could service a mortgage.

      

• FirstBuy Homes will be commissioned or built principally by councils and housing associations. They would be part-financed through: the planning system via so-called ‘section 106’ agreements struck between developers and councils, prioritising affordable homes on public land, and giving councils new compulsory powers to bring land for housing development forward more cheaply. They would also be supported where necessary by central funding.

   

• Analysis of the viability and fiscal implications of the FirstBuy housing programme draws on detailed modelling work done for the Smith Institute think tank based on average income and house price data in each of England’s 326 local authorities.

   

• To ensure that FirstBuy homes are bought by local people on ordinary incomes, local authorities would set eligibility rules to include local connection requirements and household income caps for their areas, with scope to prioritise ‘key workers’ such as teachers, nurses and tradespeople.

   

• On resale, FirstBuy Homes would be sold to other first-time buyers, with the aim of preserving the discount to keep them more affordable than market homes, and safeguarding the investment from the taxpayer. Labour would consult on the way of doing this that works best for first-time buyers, lenders and developers.

   

• An illustrative example of FirstBuy Homes purchase with resale fixed at a set discount to the market price, which is one of the options that Labour would consider to preserve affordability:
  • Luke and Emma are a 30 year-old couple each earning the local average income in their area of around £25,000 and looking to buy their first home. They could afford a house costing around £200,000, but with an average house price of around £250,000 in their local area, they are struggling to find somewhere to buy. However, they are able to afford one of Labour’s FirstBuy Homes which is priced to be within their reach at £200,000, a 20 per cent discount to the average market price. They become home-owners.
  • Five years later Luke and Emma decide to sell their home. Local average house prices have risen by 10 per cent over the period to £275,000. They sell their FirstBuy Home on at the same percentage discount they received of 20% to another first-time buyer, for £220,000.

•  

• While FirstBuy Homes would be a new national class of housing, there are already existing local examples operating successfully with similar characteristics
  • Pocket living is a developer operating in London producing one-bedroom flats that are affordable to first-time buyers on middle incomes, in some places with resale covenants in place to ensure they remain affordable in perpetuity. Pocket Living see their target market as single person households or couples, with household incomes in the region of £40,000 p.a. and in their thirties. Pocket works to develop flats that can be sold for a discount of at least 20 per cent less than the average market price for a flat in the same area, with higher discounts in more expensive areas. [https://www.pocketliving.com/]
  • Community land trusts are community organisations that develop and manage genuinely affordable homes, priced based on local earnings, with affordability preserved for every future occupier. For example, in the market town of Holsworthy in Devon homes are sold at 60-70 per cent of market value to provide for the squeezed “middle market”, between those eligible for social housing and open market buyers. Applicants for the homes are given priority according to their local connection, local employment, local residence and family connections. The Trust aims to give priority to young people, to maintain the vibrancy of the area for the future. [http://www.communitylandtrusts.org.uk/what-is-a-clt]