Arthur takes a look at the promises Theresa May made in her speech and whether they will actually make a difference to the growing problem.
Having catcalled the Labour party continuously for having a ‘magic money tree’ during the recent election, Theresa May has now found £12 billion to improve the state of Britain’s current housing crop. The Prime Minister has staked her reputation to this new project, claiming that she will personally oversee it and oversee the “British dream a reality”, whatever that is.
£10 billion will be set aside to bolster the Help-to-Buy scheme. This money will go towards helping people get on the property ladder. The Help-to-Buy scheme allows people to buy a house with just a 5% deposit, with the government providing an equity loan of up to 20% which is repaid when the home is sold, or after 25 years, whichever comes first. The scheme has already proved very popular, with over 130’000 successful buys through the scheme. The new £10 billion promise by the Government will fund the scheme until 2021 and give an estimated 135’000 people the ability to own their own home.
Theresa May also promised that £2 billion has been set aside to increase the amount of money spent on affordable housing to £9.1 billion. This will be split across subsidising development plans for ‘affordable housing’ as well as building new social housing for councils. However, this commitment is nowhere near what is needed to meet the estimated 200’000 homes a year Great Britain needs to build. Instead, this additional funding will allow for an extra 5,000 homes to be built a year according to Steve Collins CEO of Rentplus. Furthermore, this funding is still going towards of ‘affordable housing’, where the government subsidises rents to private landlords, which costs the government a vast amount of money each year.
Theresa May has also promised to offer social housing tenant’s more security by ensuring that rents will not be able to increase any more than the level of inflation +1% for five years, starting in 2020. This scheme will first focus on areas where there are tenant’s at a high risk of falling behind on rents or homelessness. Whilst many have called for more stringent measures in regards to rents, for example rent control throughout the private rental sector, any movement towards improving a tenant’s security is good.
Will the promises work?
The government is still looking at short-term solutions to a long term problem. The truth is that money needs to be poured into building more houses, especially government owned social housing. This will alleviate a lot of pressure on the private rental sector whilst also freeing up housing for those that want to buy. This will, in turn, drive down the amount of people that cannot afford to rent or buy, meaning that less pressure will be put on the government to provide social housing.
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