The following key principles have been adopted:
- The Review starts from the premise that a long term structural decline in homeownership has negative implications for the economic well being and social cohesion of the country as a whole. However the Panel recognise that very high levels of homeownership may also cause problems. The Review is not attempting to set a specific target level, however it is seeking to identify the causes of the long term decline and suggest areas where access to homeownership can be improve to reverse this decline.
- There is also an overriding principle that the Review will not promote homeownership at the risk of a ‘net loss’ of other tenures. Again there is a premise that access to a variety of tenures is healthy for both the economy as a whole and for individuals at different life stages.
- The Review is focused on sustainable homeownership as opposed to short term increases that are most at risk of either cyclical fragility or short term fluctuations in the home owners personal position.
- The Review is looking at the long term trends in homeownership, with shorter term impacts being considered where they provide clues to long term trends.
Five Initial Themes
1. Specific constraints on buying your first home
Buying your first home is the area of homeownership that is focused on most clearly in both media coverage and in recent studies. Areas which have been identified as requiring additional study, and will be considered in the Review are as follows:
- The impact of student loans on the finances and attitudes of young people
- Savings habits of prospective home buyers
- How difficult is homeownership for those without support from friends and family, or individuals compared with homeownership as a couple. How has the income needed to buy and sustain homeownership changed since the millennium?
- The structure of mortgage availability for new buyers – including the potential impact of longer working lives
- What is the outlook for homeownership on unchanged policies and what does this mean?
- The nature of the job market and/or personal desire/confidence in buying a home.
- Tax policies
The above investigations will overlap with the review of existing and recent policy initiatives below.
2. Effectiveness of transitions in home tenure
Regardless of whether an individual or family is a first time buyer or a buyer in later life, there are positives and negatives, opportunities and challenges from the transition either from renting to buying, or from a ‘starter home’ to a home suitable for family life. The dynamics of these transitions appear to have changed, with a greater leaning towards renting for longer, and less upward mobility even once on the housing ladder. There are also a variety of transition or ‘staircasing schemes’ available that have not generally been independently reviewed. This theme seeks to look at the challenges and constraints of the transition from one form of home occupancy to another, looking principally although not exclusively at the key financial impacts.
- Moving from private renting to buying
- Social rent towards rent or buy
- Impact of moving up the homeownership ladder
- The effectiveness of transition schemes
- Specific review of barriers in individual circumstances
3. Homeownership later in life
This is an area that has been studied less than homeownership for first time buyers. Occasionally homeownership for families where children have left home is seen as ‘part of the problem’, with older home owners often being ‘oversupplied’ with space. However, even if we accepted this premise, the challenges in this area are likely to grow, with several key trends impacting on this area:
- The increase in retirement age having a significant and increasing impact on the lifestyles and economics of the 55+ age group
- The prospect of worsening DB pension provision looking even a decade ahead
- A greater tendency for adult children to remain either totally or partly at home for longer
- A potentially growing group for homeownership has not been an option until they are at or near this phase.
This theme aims to investigate this important area – including both the issues created for these home owners/potential home owners and the impact on the wider market.
4. Housing supply
Housing supply is a significant and well covered topic. It is not practical within the timing and the resources of this review to do a full bottom up review. However, it would also be fundamentally wrong to skip the main driver of the housing and homeownership crisis that the UK faces. There have been a number of changes to planning policy that will have a long term effect on supply – which, if followed through will be a positive one. The review will examine what recommendations have already been made and to what extent they still contain valuable options for today’s homeownership rates. In addition, the following current areas will be considered in detail:
- Review interrelationship between supply and homeownership
- Attempt to quantify how recent planning changes will impact on supply
- Resources in local authorities
- Pace of build on large sites
- Government funding for larger development sites
5. Long term impact of current policies
Over the last few years there has been an unprecedented level of political policy focus on the housing market, including particularly the planning system and access to finance for first time buyers. This theme will review the key initiatives in place and attempt to identify their likely short, medium and long term effects; for example:
- Current supply-side policies to be reviewed: Get Britain Building
- Garden Cities
- Public Sector Land Programme – bringing surplus public sector land back into use
- New Homes Bonus including policy on empty homes
- Custom Build / Self Build
- Builders Finance Fund
- Housing Growth Partnership – support for small builders
- Permitted development rights
- Review of key planning consultations to include amendments to NPPF, review of CIL, consultation on garden cities, local plan review, consultation on new homes bonus, housing and planning bill
Current demand-side policies to be reviewed:
- Starter Homes
- Help to Buy Schemes (including HtB with shared ownership and HtB: ISA)
- Right to Buy Schemes
- Intermediate Tenures
- Review of taxation to include stamp duty and impact on Buy to Let mortgages