No Help to Buy for England’s average renters

New analysis from Shelter reveals how far out of reach the government’s Help to Buy scheme is for those on typical incomes. Only 4,142 households with incomes of £30,000 or less used Help to Buy in the last year - representing fewer than 0.2% of England’s private renting households in this income bracket.

According to the government’s latest English Housing Survey, the average private renting household has a gross annual income of £27,000. Whereas the average first-time buyer accessing Help to Buy has gross earnings of at least £50,000 - a staggering 85% higher.

Today’s research clearly demonstrates that, while helping a minority of high earners onto the housing ladder, the flagship policy has done little for the vast majority of private renters looking for a stable home. Furthermore, Shelter is critical of the recent announcement to extend mortgage terms for Help to Buy beneficiaries, arguing this will simply leave people in debt for longer while doing nothing to address the shortage of genuinely affordable homes.

The charity’s analysis also looks at the growth in pre-tax profits of the country’s three largest developers (Persimmon, Barratt and Taylor Wimpey) since the introduction of Help to Buy in 2013. All three have managed to more than double their reported profits in under six years, with Barratt seeing the greatest profit rise of 325%.

Interestingly, this growth appears not to be driven by building more homes but due to an upsurge in the profit made on every property sold. For example, Barratt, now makes £53,542 profit per unit on average, compared with the £14,053 it made in 2013. This is despite only increasing the number of homes it has built by 12%.

Shelter is calling on the new government to shift its focus onto social housing by investing in a new generation of genuinely affordable and secure social rent homes, which are linked to local incomes.

Polly Neate, chief executive at Shelter, said: “Help to Buy is often touted by the government as a major success, when in truth it’s a major failure. It’s a policy that boosts the bank balances of big developers but has nothing to offer the average renter.

“The problem with the latest changes to Help to Buy is they’ll take already expensive homes and offer to spread out the costs over a longer period, which perversely ends up with the buyer paying more. Given there are millions of people who can barely afford to keep any kind of roof over their head, this piecemeal approach is never going to solve the housing emergency.

“At the crux of this crisis is the desperate shortage of genuinely affordable social homes. In fact, three million more social homes are needed in the coming years. This is where the new government should be taking decisive action, and where the greatest opportunity to help trapped renters lies.”

Case study: Sylvia, 42, shares a one-bedroom flat with her two daughters, who are aged 12 and six, in Greenwich. Despite earning a salary of more than £35,000 a year, Sylvia sleeps on her sofa while her daughters have the only bedroom.

“Although my flat is nice, I need two bedrooms really as my girls are sharing a double bed and I have to sleep on the sofa. My dream is to buy somewhere one day but at my age it’s scary - even coming up with even a 5% deposit feels impossible.

“I’d love to help my children and save whatever I can and put it into bank accounts I’ve opened in their names, so they’ve a hope of buying one day or going to university. I want them to have a better future.”