The latest political wheeze to emerge from the northern marches arrives wrapped in the familiar packaging of benevolent concern for the young. Andy Burnham, that tireless salesman of regional virtue, is preparing to unveil something called “Your First Home.” The name alone is a small masterpiece of advertising copy: possessive, intimate, and entirely free of any awkward suggestion that the thing being offered might not, in the end, be yours at all. Under this scheme the aspiring householder may, with a deposit of a mere 2.5 per cent, acquire a new-build property. The remaining 97.5 per cent will be supplied by a mortgage, presumably at the sort of interest rate that currently makes a banker’s pulse race with quiet professional satisfaction. Six per cent has been mentioned. One can almost hear the collective sigh of relief from the housebuilding industry as the numbers are announced.
What could possibly go wrong? Quite a lot, as it happens, and most of it has gone wrong before, under different names and with only slightly less optimistic branding. The first-time buyer is invited to step onto the property ladder with almost no equity and a mountain of debt, the better to purchase a dwelling whose chief distinguishing features are a thin coat of paint, a kitchen island designed by committee, and the lingering scent of the developer’s profit margin. The house, one suspects, will already be overpriced relative to the surrounding market. The scheme will ensure that it remains so.
A simple question presents itself, and it is the sort of question that schemes of this kind prefer not to answer. Why is the same generous deposit not available for existing homes? The silence that greets the question is eloquent. Existing homes are already there; they do not require the coordinated efforts of planning officers, marketing departments and political announcements. New builds, by contrast, keep the wheels of a particular industry turning. They also provide politicians with the pleasing sensation of having Done Something. In a flat market, where prices show little inclination to rise of their own accord, a carefully calibrated injection of demand can perform the useful service of propping them up. The government looks active. The builders look prosperous. The young buyer looks, for a moment, as if he has been given a leg up.
The leg, unfortunately, is attached to a body that will spend the next twenty-five or thirty years discovering the true cost of ownership. Mortgage payments are only the beginning. There are service charges, ground rents that somehow never quite wither away, the unexpected need to replace a boiler that was installed with all the care of a temporary fixture, and the peculiar British tradition of discovering that the “affordable” new estate sits adjacent to a dual carriageway or a flooded field that the brochure somehow omitted to mention. The buyer who entered with 2.5 per cent equity may find that equity remains stubbornly theoretical for years. Negative equity is not a theoretical concept; it is a condition in which the house owns more of you than you own of it.
One is invited to believe that this arrangement addresses the deep structural problems of the British housing market: the punitive weight of stamp duty, the chronic failure of supply to meet demand, the long-term collapse of genuine affordability. It does nothing of the kind. It merely rearranges the furniture so that demand is stimulated in the one sector that benefits most from political intervention. The real difficulties remain where they were, carefully unexamined. A government that preferred to confront them would have to risk the displeasure of those who profit from the status quo. It is so much easier to announce a scheme with a warm, possessive title and a photogenic deposit percentage.
Of course, a still simpler remedy presents itself, though one that successive administrations have treated with the delicate aversion usually reserved for a relative’s embarrassing illness. Were the government merely to attend to the persistently expressed wishes of the electorate, put an end to the illegal small-boat traffic across the Channel, and arrange the repatriation of the migrant population already present, the chronic mismatch between people and roofs might ease of its own accord. In that event the elaborate machinery of “Your First Home,” with its wafer-thin deposits and its quiet enrichment of the developers, would be revealed as the unnecessary contrivance it is. Demand, after all, is not a mysterious atmospheric condition; it is the arithmetic consequence of numbers. Yet to act on that arithmetic would demand a political will that, for the time being, remains as scarce as genuinely affordable housing.
The prudent course, therefore, remains the unfashionable one. Save a proper deposit—ten per cent, twenty if possible. Buy when the numbers make sense for your own circumstances rather than for the electoral calendar. Ownership of a house brings obligations that extend far beyond the monthly standing order. To enter that arrangement under the temporary spell of a government incentive is to mistake a sales technique for a solution. The property market will not be fixed by encouraging young people to borrow almost the entire value of an overpriced new-build. It will merely ensure that the next generation learns, at considerable personal expense, what previous generations already knew: that the ladder is real enough, but the rungs have a tendency to give way just when one is counting on them.