The government has launched a new 95% mortgage scheme. This scheme aims to help first time buyers or current homeowners secure a mortgage with just a 5% deposit. Along with the holiday on stamp duty this is part of a government strategy to try and keep the housing market booming.
While many of those struggling to get out from the under the thumb of a landlords may appreciate this government initiative, housing will remain unaffordable to many in the UK. The Guardian has claimed that:
“The analysis found a single woman on the UK median female wage for 30- to 39-year-olds – £30,258 – could not afford a 95% mortgage on a median-priced property in the cheapest band in more than half of local authorities in England and Wales.
Meanwhile, a single man on the median earnings for his demographic – £34,567 – could not afford a mortgage in almost half (48%) of local authorities nationwide.”
This analysis ignores the fact that a great many people living in the UK are not “median earners”, earning far less than £30,000. Two million workers earn only the national minimum wage, which is £17,000 a year for someone 25 or over working the UK average of 37.5 hours a week. In 2019 roughly 60% of UK workers earned less than £30,000, and roughly 20% earned less than £17,000.
This means that those most able to take advantage of these new government initiatives will be those who are already well off compared to most of us, and this will do little to alleviate the growing housing crisis that many people are suffering under.
According to the National Housing Foundation 8.4 million people in England lived in an unaffordable, insecure or unsuitable home, with 3.6 million living in overcrowded conditions and 2.5 million unable to afford their rent or mortgage.
The housing charity Shelter has estimated that 250,000 people are homeless and trapped in temporary accommodation and that 39% of private renters, equivalent to 3.2 million people, say they have been forced to live in dangerous or unhealthy conditions because they fear complaining to their landlord will trigger a retaliatory eviction.
While the government claims these plans will help people to buy homes, in the long therm they will only create demand for housing at the current prices, driving those prices even higher and making the housing crisis worse.
Over the last ten years wages have remained stagnant while inflation has risen, meaning that we have grown poorer in real terms as house prises have risen. From a human standpoint, housing is a fundamental need for all human beings, and the fact that the government is continuing to promote increasing house prices is an attack on us all.
But even from a detached economic standpoint, prices on housing can not rise forever. Speculation on infinitely rising house prices has a hard limit in the ability of the rest of society to pay for that inflated housing. Any bubble the government promotes will eventually burst, just like it did in 2007.
Of course, the conservative government may not be thinking in terms of human suffering or even economic stability. Property tycoons have bankrolled the Tory party to the tune of £11 million since Boris Johnson became prime minister. This is almost a quarter of the total donations to the party.
In 2017, almost one in five Members of Parliament where found to be landlords. The conservatives were the worst, with over a quarter of their MPs being landlords, but even among Labour MPs more than one in ten were landlords. Many among the political class and the class of big property owners have overlapping interests that are opposed to the needs of most of the people suffering under them.
As long as our society is structured around housing as property that can be speculated on and not a necessity that everyone should have access to, this crisis will continue regardless of how many houses are built or how much support is promised to those in need of a home. If there is money to be made in housing, people will make it, and those people will be able to use that wealth to influence any government in their favour. ■
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