Brown's shared equity expansion is not the answer for first-time buyers.

PricedOut, the affordable housing campaign, notes with disappointment Gordon Brown's announcement that he plans to expand shared equity schemes for would-be first time buyers in the near future. With houses now unaffordable in 75% of the UK, and the average house price standing at over six times the average salary, Gordon Brown has failed to acknowledge the underlying causes of extortionate house prices, prices he pledged to keep under control when he became chancellor in 1997 (see http://www.bbc.co.uk/politics97/budget97/live/housing.shtml). This move effectively represents the Government's half-price ticket to negative equity for would-be first time buyers.

The best thing for first time buyers would be to allow the market to re-adjust to more affordable, sustainable house prices. It is an unsustainable solution to continue to prop up house prices by encouraging more people to get onto the ladder via shared equity schemes, thereby increasing the numbers of people in the UK taking out high levels of debt for over-priced houses.

Shared equity schemes treat the symptoms of the current housing affordability crisis, but do little to tackle the root causes. The Government needs to recognize and rectify its mistakes over the last ten years, including:

Failing to regulate property speculation and multiple home ownership, particularly in the 1-2 bed property market where first time buyers are most likely to buy
Failing to regulate irresponsible lending
Failing to tackle empty homes, and the need to build more homes.

The Government is now having a knee-jerk reaction to years of above-inflation house price growth, which has resulted in many banks shutting up shop to first-time buyers with less than a 10% deposit. By expanding shared ownership schemes, the Government will continue to prop up the unsustainable property market whilst encouraging more first time buyers to take out loans on over-priced homes, and thereby exposing them to greater future risk of negative equity. PricedOut believe that this would be tantamount to Government-backed sub-prime lending.

PricedOut asks, at a time of economic uncertainty, do we really want to pump millions of pounds of tax-payers money into a declining property market, a steady readjustment of which is no bad thing for would-be first time buyers and owner-occupiers. Instead, this money would be better used building more family and council homes. PricedOut would therefore discourage first time buyers from taking up these shared equity schemes, thereby taking on high levels of debt on over-priced properties and putting themselves at risk of negative equity.

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PricedOut continue to campaign the Government to:

Tackle the root causes of the housing affordability crisis, not just the symptoms
Recognise that over-priced houses are not a good thing
Build more affordable homes
Stamp out property speculation and tax multiple home-ownership
Tackle irresponsible lending.

For more information, please contact: press@pricedout.org.uk or 07904 017072.

www.pricedout.org.uk
The campaign for affordable house prices