Chancellor claims to help first time buyers – what history actually shows us

The Chancellor has again announced schemes to “help” first time buyers – yet will they actually do so?

Firstly, and this is something you won’t often see mentioned in much of the media, Rishi Sunak removed a perk last year that only first time buyers enjoyed before 2020. Up until last year first time buyers paid no stamp duty on the first £250,000 of a new home. Then he opened it up to others putting first time buyers at a disadvantage, who now see existing buyers and landlords seeing a tax cut. This move is estimated to have cost the public finances up to £4 billion AND push up prices way beyond the level of tax saving. Asking prices were simply increased.

Then we get to today. Measures to assist with deposits are NOT only for first time buyers. Look beyond the headlines and they are open to all up to £600,000. So who will really benefit from tax cuts and taxpayer support?

Given measures last year simply increased prices with first time buyers facing even higher prices, what to do? Well, why not bring back a scheme that ran from 2013 until 2016 during which prices increased above wages and saw ever more younger people having to rent as prices grew beyond their reach? After introduction falls in owner occupiers continued while private renter numbers continued to grow:

Courtesy LSL

In Greenwich borough numbers of renters increased sharply despite measures that would apparently help first time buyers. Numbers increased from 19.7% in 2014 to more than 32% in 2020. The number of those in owner occupied housing reduced from 46 per cent to 40 per cent. All while “help” was apparently given to first time buyers.

The odd thing is private renters don’t generally vote Tory, and measures will increase the number of private renters and reduce home ownership – as another bump to prices ensues – meaning areas like Eltham see the prospect of the party losing chances to gain what is a tight seat. And for a party apparently keen on the free market, constant state intervention to push up prices is a little odd.

Private renter growth. Courtesy Full Fact.

Pushing up prices also does nothing to help assist demand for social homes, so we can expect costs of those to increase. Increasing demand without supply is the name of the game. Lewisham for example spent £109 million of taxpayers money on emergency housing in the past four years alone. Add that to the £4 billion (and counting) stamp duty holiday and it’s all getting a bit expensive for public finances – but those with homes, developers, estate agents and landlords are benefitting so who cares?

Forget the headlines in much of the media about “helping first time buyers”; we’ve been here before. This doesn’t benefit the vast majority of first time buyers if looking beyond Sunak’s PR much of the media report without question. It may help a few who get in early before prices rise again but hurts many more in the mid term. By 2025 it prices out more first time buyers and costs the public billions. Quids in though if a multiple home owner like the Chancellor.

Full disclosure: I’m a private renter who has had to move many times with no security of tenue. Every time a Chancellor (and we can go back a long way) announces something like this it pushes security away from me and my family. I could save £10k a year (I can’t on high rents…) but what good is it if a measure to “help” me pushes up the average price by 20 grand in a year? That’s above and beyond already very high prices. The OBR now state this measure will increase prices 15 per cent beyond expected increases. It’s not just me though, as the rising numbers renting privately make very clear. To have the chancellor state this is supposed to help us is insult to injury.

 

Support me in running the site through Paypal here

You can also contribute via my Patreon account by clicking here

I also have a Facebook page for the site here

John Smith

I've lived in south east London most of my life growing up in Greenwich borough and working in the area for many years. The site has contributors on occasion and we cover many different topics. Living and working in the area offers an insight into what is happening locally.

4 thoughts on “Chancellor claims to help first time buyers – what history actually shows us

  • March 3, 2021 at 3:14 pm
    Permalink

    Very short term thinking by the chancellor as it will not assist growth in owner occupier numbers which tend to vote conservative. I can see private renter numbers in Greenwich reaching 50 per cent which is a gift to Labour.

    Economic madness to fuel supply without demand and risks a financial imbalance and bust. No stability. I’m on the right and see this as nuts.

    Reply
  • March 3, 2021 at 10:58 pm
    Permalink

    It’s all a scam to be honest, Rishi is a privileged idiot. It’s extremely frustrating to see almost every media outlet peddling ‘help for first time buyers’, when it’s anything but. If Rishi really wanted to help first time buyers he’d apply the stamp duty holiday to first time buyers only. It’s ludacris that landlords should benefit from this scheme. As long as those in power alongside their privileged media and construction chums hold the power, nothing will ever change in this joke of a democracy.

    Reply
  • March 10, 2021 at 10:19 pm
    Permalink

    Seems like the Tory party gets loads of donations from home builders / developers as most schemes seem to benefit them more than anyone in society. And they don’t get them to strip their faulty cladding either, taxpayers and leaseholders have to pay for that

    Reply
  • March 10, 2021 at 10:21 pm
    Permalink

    I guess they want power and money from their donors more than to make decisions sensible for either the economy or society

    Reply

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.