BUDGET COMMENT: Helping people borrow more is not the same as making homes cheaper

In reaction to the Government’s Autumn Budget, please see below commentary from Vann Vogstad, CEO of COHO, a UK shared living marketplace platform supporting more than 6,000 HMOs and 55,000 tenants across the UK.

“We need to look at affordability properly, rather than assuming that helping people borrow more is the same as making homes cheaper.”

“Support for first-time buyers needs to go hand in hand with policies that encourage housebuilding and make it financially viable to invest in property.”

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“We need to be realistic about what the Your First Home Scheme can achieve. The Government’s announcement of £4.7bn in government-backed lending, allowing eligible first-time buyers to purchase a new-build home with a 2.5% deposit and a 20% equity loan, could help more people take their first step onto the property ladder. But getting people through the door is only part of the challenge.

“Giving people access to more money or making it easier to secure a mortgage doesn't necessarily make housing more affordable in the long term. If buyers have greater purchasing power but the supply of homes doesn't keep pace with demand, there is a risk that prices rise as a result.

“That's particularly important at the more affordable end of the market. The scheme is specifically aimed at new-build properties, so its success will depend in part on whether enough homes are being built to meet demand. Helping people buy is a positive step, but we also need to ensure there are enough homes available at prices people can realistically afford.

“We need to look at affordability properly, rather than assuming that helping people borrow more is the same as making homes cheaper. Support for first-time buyers needs to go hand in hand with policies that encourage housebuilding and make it financially viable to invest in property.

“The announcement that the Lifetime ISA will be replaced by a First Time Buyer ISA, alongside plans to address the penalty for people whose chosen home exceeds the Lifetime ISA price limit, also recognises some of the barriers buyers face. These changes could give people greater flexibility when saving for a deposit, but the bigger question of whether they can afford a home in the first place remains.

“It's also important to recognise that renting will remain the right option for many people, whether that's because of their circumstances, their finances or simply the flexibility it offers. We shouldn't focus so heavily on homeownership that we overlook the need for a healthy rental market.

“The Government needs to consider the knock-on effects of its policies. If helping more people buy homes reduces demand for rental properties, that could be positive for affordability. But if demand for homes outstrips supply or policies discourage investment in the rental sector, the outcome could be very different. We need to understand that relationship rather than assume one measure will solve the problem.”

Ends

Editors notes

COHO is a marketplace platform used by landlords, property managers, tenants and prospective tenants to run shared homes more efficiently. Used by over 6,000 HMOs, it is one of the UK’s leading systems for managing, marketing and maintaining shared living properties.