Can alternative property investment fix the housing crisis? Is property investment without a mortgage the way forward?
We’ve recently written about how bad the housing crisis actually is, but it might not have to be so doom and gloom.
Cllr Martin Tett, the Local Government Association housing spokesman explained, “The housing crisis is complex and is forcing difficult choices on families, distorting places, and hampering growth. But there is a huge opportunity, as investment in building the right homes in the right places has massive wider benefits for people and places.” (1)
Colossal Cost
“The problem with housing is that to make a real impact, the sums of money required are truly colossal. Britain’s housing stock is worth £6 trillion. A billion or two, sprinkled here and there on HomeBuy (2005), Open Market HomeBuy (2006), First Buy (2011) and Help to Buy (2013) has been a waste of taxpayers’ money. During the lifetime of these schemes, fewer and fewer young adults and families have been able to buy. It takes tens of billions to actually make a difference.” (2)
Has Progress Been Made?
The BBC recently noted that “Thousands of homes for first-time buyers will be built this year, according to the government.” (3)
To help build the homes for first-time buyers, ‘The Starter Homes Land Fund’ will distribute £1.2bn worth of funding across thirty areas in England. The money will fund “new developments on brownfield sites.” (3)
To qualify, buyers must be between the ages of 23 and 40. They will also receive a discount of at least 20% below market value. The discounts will apply to homes “worth up to £250,000 outside London, or £450,000 in the capital.” (3)
The 2016 Autumn Statement also placed great significance on the housing crisis, promising an extra £1.4bn to build 40,000 new homes. In addition to this, £2.3bn housing infrastructure investment has been set aside to help build 100,000 new homes in high-demand areas. (4)
You can read more about these proposals in our blog about the Autumn Statement.
Previous Home Ownership Programmes
As detailed above, previous schemes have included HomeBuy (2005), Open Market HomeBuy (2006), First Buy (2011) and Help to Buy (2013). The Help to Buy (2013) scheme recently came to an end. The programme received both praise and criticism.
The Council of Mortgage Lenders claimed it worked “exceptionally well.” (5)
“Under the programme, borrowers were able to get a mortgage with just a 5% deposit. If those borrowers were unable to make payments, the government promised to compensate the lender.” (5)
The scheme is said to have helped over 100,000 individuals or couples become homeowners. (5)
Alternative Solutions
We’ve previously written about Fintech providing a potential solution to a system that no longer worked for everyone. Housing is certainly no exception. With the help of the crowd, property investment can be hassle-free. You no longer need to scrape together a large amount of capital to get started, nor do you have to worry about a mortgage. Here at Property Moose, you can become a landlord with just £10.
Property Moose is driven by social change. We’re trying to lower the barriers to homeownership so that, in the midst of this housing crisis, opportunity and inclusivity exist.
If you want to start climbing the property ladder but don’t know where to start, check out this blog post!
Written by Jenna Kamal
Sources
- https://www.theguardian.com/society/2016/dec/22/home-ownership-among-25-year-olds-in-england-and-wales-has-halved-in-20-years
- https://www.theguardian.com/business/2016/nov/20/britains-housing-crisis-must-be-tackled-now
- http://www.bbc.co.uk/news/business-38494333?intlink_from_url=http://www.bbc.co.uk/news/topics/38a2903a-b068-486e-bda2-58c035e1490a/housing-market&link_location=live-reporting-story
- http://www.telegraph.co.uk/business/2016/11/23/autumn-statement-chancellors-speech-full/
- http://www.bbc.co.uk/news/business-38418289?intlink_from_url=http://www.bbc.co.uk/news/topics/38a2903a-b068-486e-bda2-58c035e1490a/housing-market&link_location=live-reporting-story
Disclaimer and Legal
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