Boost deposit savings to reignite home-ownership dream
Employers and government should both chip in to radically quicken the time taken for first-time buyers to save house deposits through the auto-enrolment of monthly pay-packets – Localis has today urged.
The call comes as one of three main recommendations presented by the think-tank Localis in a report focused on how to disrupt the housing market for the benefit of aspiring home-owners currently locked out of the property ladder.
Entitled ‘Disrupting the Housing Market’ the paper, sponsored by housing-led regeneration experts Lovell, presents three key policy recommendations for breaking the housebuilding impasse and addressing structural problems affecting supply, demand and affordability of new homes nationwide, including : –
- extension of principle of auto-enrolment from pensions to saving deposits among 18-40 year olds to radically speed up the time it takes young people to earn the deposit for their first house;
- giving local authorities discretion to re-designate greenbelt land through the creation of ‘yellowfield registers’ – allowing the sustainable release of land for new homes in areas where green belt protection is unwarranted;
- state investment in – and ownership of – new housing factories to disrupt the housing industry and produce a generation of new modular homes – for on-site assembly.
Jack Airey, head of research at Localis, said: “Whether out of choice, or simply because they do not have enough money at the end of each month to do so, a majority of people are not building any financial capacity with which to get a mortgage and purchase a home in the future.
“This crisis of saving transcends people of all tenures, ages, regions and socio-economic classes yet these consequences are underappreciated, least of all by non-homeowners themselves. Under this auto-enrolment scheme, rather than relying on the ‘Bank of Mum and Dad’, employers and government would help young people onto the housing ladder.”
According to a YouGov poll conducted for the report, some 58% of those who did not own their home said they were saving nothing at all each month for a deposit, with fewer than one quarter (23%) admitting to putting aside any cash for a new home. However, the research also revealed that the overwhelming majority, just under four-in-five (78%) of all homeowners were either happy or fairly happy with their accommodation, with only 8% admitting to be fairly or very unhappy.
Liam Booth-Smith, chief executive at Localis, said: “Home-ownership is a bulwark against populism and radicalisation – when you have a tangible stake in society you are far less likely to want to tear it down. It is also an important life ambition, one that recent generations have enjoyed and future generations should too.
“The housing market is everyone’s problem – those who already own their home are dependent on someone else buying it. If the first rung of the housing ladder is lifted too high, there will be fewer and fewer buyers to sell to in the future.
“A Burkean intergenerational contract needs to be restored between those who wish to own their home, those that already do; and those that want to leave for retirement.”
The report also contains a suite of policy recommendations for overcoming deep-rooted structural obstacles to quickening the pace of house-building, with priority areas focused on: –
- giving local authorities more flexibility to plan for new homes;
- tasking the National Infrastructure Commission (NIC) with creating a programme of new towns where they are needed around the South East;
- disrupting the housing industry through strategic state support for modular homes factories and offsite construction methods;
- a more direct use of surplus public land to site new housing developments;
- extending protections and flexibilities for the increased number of individuals and families who use the private rented sector by allowing them to choose their initial tenancy length at six-month intervals up to thirty-six months, with a one-month break option after six months.
Jonathan Goring, managing director of Lovell said: “As a developer of housing of all tenures, Lovell plays a frontline role in helping to tackle the undersupply of new homes in the UK.
“We are calling for more flexible and imaginative use of greenbelt and public land, and more widespread use of modern construction techniques. These measures will more swiftly deliver new homes in places where people want to live.
“Our proposals are practical and logical, provide a solution to the housing crisis and will enable the next and future generations to enjoy the benefits of affordable property ownership.”