A government plan to deliver discounted starter homes has left 85,000 young people waiting in vain for an affordable place to live, in a policy branded “deplorable” by a cross-party committee of MPs.
The 2015 initiative to build 200,000 homes and sell them at a 20% discount was formally scrapped this year without a single home being built. But £173m was spent buying land, a damning report by the Commons public accounts committee said. It is now on course to deliver only 6,600 homes and is being replaced by a new scheme.
The influential committee highlighted the abandoned scheme as a waste of time and resources as part of a broadside against government housing policy, which it said has been “stringing expectant young people along for years” with housing policies that “come to nothing as ministers come and go with alarming frequency” – there have been 19 since 1997.
It also criticised the Ministry of Housing, Communities and Local Government (MHCLG) for failing to say how it will reach its ambition of building 300,000 homes a year in England and accused ministers of an “alarming blurring” of the definition of affordable housing.
The attack came a week after annual figures showed construction of the cheapest social housing remained at close to its lowest level since the 1980s, with just 6,566 homes built between March 2019 and April 2020. Affordable homes of all kinds numbering 57,644 were built in England but social housing experts have estimated 145,000 new affordable homes are needed annually. Official figures on Tuesday revealed housebuilding starts fell by almost 40% during the pandemic.
“The department for ‘housing’ is at risk of losing the right to the title,” said Meg Hillier MP, chair of the committee. “It has serially, constantly failed to deliver affordable new homes or even make a serious attempt to execute its own housing policies or achieve targets before they are ditched, unannounced – costs sunk and outcomes unknown.… MHCLG needs to ditch the false promises and set out clear, staged, funded plans, backed by the necessary laws and with a realistic prospect of delivering.”
The Starter Homes scheme fizzled out when mortgage lenders raised the difficulty of valuing properties with discounts applied.
David O Leary, policy director at the Home Builders Federation, said its failure “demonstrates the importance of ensuring that proper consideration is given to the practical implementation of interventions and their market impacts as early as possible”.
The PAC said the government remained unable to say when its new starter home policy – called First Homes, which offers 30% discounted homes to local first-time buyers – will deliver the first properties to purchase.
“Its reliance on developer contributions to fund First Homes is part of an opaque, complex mechanism which risks less money being available to local authorities for housing and infrastructure,” the report said. “The department does not have a timetable or target for delivering First Homes but is planning a pilot to build 1,500 First Homes ‘within the next couple of years’, which it wants to learn from before further planning of the new scheme.”
It also said it was “wearily familiar” that the MHCLG is “unable or unwilling” to clarify how it will achieve its ambition of 300,000 new homes per year by the mid-2020s.
David Renard, the Local Government Association’s housing spokesperson, said: “The government must hand councils the powers to build new homes at a scale not seen since the 1970s when local authorities built 40% of new homes. Councils fully support the aspiration of people wanting to buy their own home and helping those that want to buy to be able to. However not everybody is ready to buy.”
“This report shows how the government’s approach to solving the housing emergency has been focused on all the wrong solutions,” said Polly Neate, chief executive of Shelter. “The government has persisted with schemes for expensive homes which often end up not getting built. There is wide public and political support for social housing across the country, but progress is nonexistent.”
An MHCLG spokesperson rejected the PAC report, saying it was “misleading”. “Since 2010 over 663,000 households have been helped into home ownership through government schemes,” they said. “We’re also investing over £12 billion in affordable housing over the next five years – the largest investment in a decade – and our new First Homes scheme will help local people and key workers buy their own home, in the area they already live, at a discount of 30%.”