On Monday, the government announced a new way for you to acquire a property. Dubbed ‘NewBuy’, it is a scheme aimed at all home buyers, allowing them to access 90-95% loan to value mortgages. This is accomplished through the Government providing additional security for the loan, in the form of a 5.5% guarantee.
It is the kind of policy that is born when the state decides to give its consent to a shotgun wedding between amnesia and myopia.
Only a few years after an enormous credit crunch – the global return of all kinds of prodigal chickens – the government seems to have forgotten that one of the main causes was a massive subprime mortgage crisis in the USA. I struggle to understand how anyone can just ignore the socially disastrous legacy of Fannie Mae and Freddie Mac.
But just as bad is the short-sightedness of a housing policy that treats the short-term ability of people to get onto the ‘property ladder’ as far more urgent than the long-term and chronic housing shortage. This would be bad enough even if we were to discount the numerous difficulties that have been caused by property booms. The policy is made even worse by the idea that current home owners should also be able to access the mortgages; effectively, this policy is designed to create a miniature housing bubble.
Grant Shapps is mortgaging the future for the sake of quick results now. Doubtless if the construction companies who are falling over themselves to sign up for NewBuy can sell a few more new build homes, the policy will be judged a success. But nothing will have changed; nothing will have been done to address the many systemic problems.
Perhaps worst of all, the Liberal Democrats currently appear badly placed to replace this mess with anything approaching a long-term policy. At the last general election their policy briefing tinkered around the edges, talking a good game on empty houses and insulation, without offering much hope of addressing the central issues. To get a more detailed view on housing, one has to go all the way back to ‘Affordable Homes in Safer, Greener Communities’ – an excellent paper to be sure, but one that is now over seven years old.
There is an opportunity here for a political party with the requisite clarity and bravery to go against the historically-inept flow of most government housing policy and to set out a real alternative – and preferably one that doesn’t involve added legislation or new targets. This should surely be a priority for those liberals who believe in ever-increased freedom for our citizens. Housing is a basic need, but it is becoming more scarce and more expensive. It demands to be addressed with the urgency it deserves.
Tom King is Head of Policy at Liberal Insight