In an assertive declaration during the launch of his election manifesto, Rishi Sunak reaffirmed the Conservative Party’s enduring allegiance to estate agents, house builders, and the transformative power of home ownership. “From Macmillan to Thatcher to today,” he stated, “it is we Conservatives who are the party of the property-owning democracy in this country.”
This proclamation, however, strikes a discordant note against the backdrop of the current housing crisis. After 14 years under Tory governance, the dream of home ownership has become increasingly elusive for many, as house prices have soared far beyond wage growth. Twenty years ago, a median-income household could afford an average-priced house in England. Today, such a household can only afford the cheapest 10% of properties.
The situation in London is particularly dire. The average first-time buyer in the capital now faces a 30-year wait to save for a deposit on an average home. Consequently, more people are trapped in the private rental sector, subject to record-high rents and unregulated landlords. The number of adults living with their parents has surged by 700,000 over the past decade, with about 30% of 25- to 29-year-olds now residing at home. Instead of fostering a nation of homeowners, Tory policies have resulted in a country of squeezed renters, overcrowded flat-sharers, and an alarming rise in rough sleepers—more than double the number when the Conservatives took power in 2010.
In response to this crisis, Sunak’s proposed solution is a revival of the help-to-buy scheme—a policy that has dominated the government’s housing strategy for the past decade. This initiative, reminiscent of Thatcher’s right-to-buy scheme, has been criticized for exacerbating the housing crisis by inflating prices and funnelling public subsidies to major house builders. Sunak’s pledge to reinstate this policy reveals a party seemingly bereft of new ideas, clinging instead to a strategy that has proven counterproductive.
First introduced in 2013 by then-chancellor George Osborne, help-to-buy was touted as a major government intervention designed to boost home ownership. However, it has primarily benefited developers and existing homeowners, pushing house prices higher and driving public funds into the coffers of major house builders. The policy offered first-time buyers an equity loan of up to 20% (or 40% in London) on new-build properties, capped at £600,000. Buyers needed only a 5% deposit, with the remainder covered by a mortgage. The intent was to stimulate demand and, consequently, supply in the housing market.
However, economists and housing advocates foresaw the negative outcomes. Christian Hilber of the London School of Economics predicted that help-to-buy would push house prices and rents higher with negligible effects on new construction. Duncan Stott of PricedOut dubbed it “help to sell,” noting that developers and existing homeowners would be the main beneficiaries, and house prices would continue to rise due to the undersupplied market.
A decade later, these predictions have been realized. A 2022 House of Lords report concluded that help-to-buy inflated prices more than the subsidy value and offered poor value for money, suggesting funds would have been better spent on increasing housing supply. Initially a three-year program costing £3.5 billion, it was extended for a decade, costing taxpayers over £29 billion. The policy has been criticized for failing to boost new construction while driving up prices, especially in areas where housing is less needed.
House builders have profited immensely, with companies like Persimmon and Barratt posting record profits and their executives receiving enormous bonuses. However, the policy has left many buyers in negative equity, particularly those who bought overpriced new-build properties.
While the government claims help-to-buy aided 330,000 first-time buyers, many were not the most in need. Shelter’s analysis revealed that only 40% of beneficiaries actually required the program to purchase a home, with many using it to buy larger, more expensive properties. The scheme’s average beneficiary earned significantly more than the typical renter, raising questions about its efficacy in addressing housing affordability.
Ultimately, Sunak’s promise to revive help-to-buy underscores a continuity of policy that has failed to address the fundamental issues of housing supply and affordability, leaving many aspiring homeowners in a precarious position.