A high-profile housing scheme offering first-time buyers discounted homes will be unaffordable to the vast majority of workers on average or low incomes, it has emerged.
The First Homes scheme has been described by ministers as “genuinely life-changing for people all over the country”. However, new analysis suggests it will be out of the reach of average earners in 96% of England. The fresh concerns follow claims that the scheme will exacerbate the housing crisis by cutting the amount of scarce, more affordable social housing.
The scheme, which would see successful applicants given 30% off new-build homes, is aimed at military veterans and key workers such as nurses, police officers and firefighters, who will be given priority access to the properties.
But research by the charity Shelter found that, in almost all parts of England, someone on an average salary or lower could not afford to buy one of these new-build homes. It also shows that almost two-thirds (63%) of private renters in England have no savings at all for a deposit. New-build properties in England cost £314,000 on average. A 30% discount would offer a saving of £94,000, but would still require a significant deposit.
Writing for the Observer online, Polly Neate, chief executive of Shelter, warned the scheme was “a comfort blanket only, providing nothing for the people at the sharp end of the national emergency our housing crisis has become.
“At a time when we desperately need properly affordable housing, policymakers are looking to give a lucky few a 30% discount on what are still going to be incredibly expensive homes. And let’s be clear about who the lucky few are. Not those facing a monthly struggle to afford their rent.
She adds: “For those earning above the average, or with a helpful inheritance – people already on the cusp of home ownership in other words – this may get them over the line. There is nothing wrong with that, but it becomes a massive problem if it comes at the expense of social homes.”
The outline of the scheme was first announced during the election campaign. The Conservatives pledged that the discount would apply to about 19,000 homes by the mid-2020s. About 240,000 new homes are currently being built each year. However, a recent consultation on the programme did not contain any targets for the scheme.
Charities and unions have already raised concerns that it will end up reducing the amount of more affordable types of housing. The programme will be paid for through “Section 106” agreements, which require developers to build certain types of affordable housing as part of their building plans. Building more new-build homes for sale through this method could cut the amount of affordable homes for rent.
The supply of social housing, which is more secure than private rented accommodation and has rents on average 50% of the market rate linked to local wages, is already very low. Just 6,287 were delivered last year, with Section 106 agreements accounting for 57% of them. More than 1.15 million households are currently waiting for a social home in England.
A Ministry of Housing, Communities and Local Government spokesman said: “First Homes will give tens of thousands of people the opportunity to buy a home in their local area with a saving of up to £100,000, turning the dial on affordability. The government has invested £9bn in affordable housing through our Affordable Homes Programme, which we are committed to renewing, and since 2010 has delivered over 464,000 new affordable homes.”