The industry body’s latest report found government investment in homeownership – including through the 15 different schemes currently on offer – is yet to have the desired upward effect on actual homeownership levels.
So far, 90,000 new home sales have been made under the Help to Buy equity loan, NewBuy and FirstBuy schemes, with a further 74,000 mortgages completed with the support of the Help to Buy mortgage guarantee scheme, but the government has failed to reverse the decline in homeownership.
Between 2010 and 2013 (the latest year for which data is available) the number of owner-occupied homes in the UK fell by 270,000.
Tackling the question of why this is the case, Imla analysed data from the Building Societies Association, which suggested more people worry about accessing a mortgage than affording one.
The research conducted in March showed 39 per cent of aspiring first-time buyers cited access to a large enough mortgage as one of the main barriers they faced to buying a home – higher than the 34 per cent citing the affordability of mortgage payments.
Imla stated this implies many first-timers are unable to borrow a sum they consider to be affordable, which could suggest over-regulation of the market.
Peter Williams, executive director for Imla, explained that politically, homeowners are a crucial demographic for the Conservatives, so the government is throwing its weight behind a variety of different schemes to try and boost first-time buyer numbers.
He said: “But current policy is still missing the mark and failing in its objective of maintaining homeownership levels.
“This is partly because saving for a deposit and accessing high loan-to-value (LTV) mortgages remain ongoing challenges for first-time buyers. Mortgage repayments are cheaper than ever but many first-timers simply don’t qualify for a mortgage as they can’t stump up the starting sum.
“Government has moved from an overall focus on supply regardless of tenure, to a new policy centred on supply, built around home ownership, with the risk of making a bad situation worse.”
Mr Williams called the latest move to control the rental market by taxing landlords “an own-goal”, as it is likely these costs will simply be passed onto tenants, as landlords look for other ways to maintain their profits.
“There is a longer-term risk too that it has created a more volatile political environment in the housing market which may impact on owners and investors; the current political attitudes to the private rental sector are ill-focused and short-sighted.”
Imla’s report also highlighted that Basel rule changes could reduce high loan-to-value lending further, as proposed changes could mean capital requirements are set to rise further for lenders.
Homeownership levels could also be affected by the government’s stance on the private rental sector, Imla pointed out.
The report warned that tenants are likely to suffer the cost of higher taxes on landlords – through higher rents – as demand for rental accommodation continues to rise, allowing landlords to raise their rents to maintain profit margins in a more highly taxed environment.
Imla also argued the UK interpretation of the capital rules for high LTV loans supported by mortgage indemnity insurance was “unreasonably harsh” and should be made less onerous to assist higher LTV lending.
peter.walker@ft.com
