New government initiatives to boost housing will do little to help many low-income tenants or move the dial on affordability for many buyers, according to property experts.

In the Budget, Chancellor John Healey vowed to help “the two in five young people trapped by paying more than a third of their income on rent while they watch their hopes of buying their own home slip away” when announcing a new First Time Buyer ISA which replaces the Lifetime ISA for young people. A new scheme for first time buyers - Your First Home - will allow eligible first-time buyers to buy a new build property with a 2.5% deposit, supported by a government backed equity loan.

The government will inject an extra £1.5 billion into the social and affordable housing programme to boost council housing while Healey pledged another £430 million to support getting rough sleepers off the street long-term. However, he failed to unfreeze Local Housing Allowance and offered no tax relief on energy efficiency work. As expected, the Chancellor did not change Capital Gains Tax or reform stamp duty.

“Helping people onto the property ladder is a lifeline for some first-time buyers, but does nothing to improve affordability and, in truth, simply does more to prop up high house prices,” says Matt Hutchinson, director of flat-share site SpareRoom. “Helping a select few won’t make housing genuinely affordable for the majority, which has to be the end goal. That means finding creative ways to boost supply beyond building.”

Mortgage

Richard Adamson, residential auction partner at Allsop, adds: “Your First Home will help with the deposit for new-build homes, but it won’t move the dial on affordability for many buyers. With mortgage rates where they are, buying the average home in much of the South still costs significantly more each month than renting it. That was not the case under Help to Buy, when cheaper borrowing did much of the heavy lifting.”

Tenant groups and charities including Generation Rent welcomed more universal support for energy bills - including a £2.6 billion scheme where people living in Council Tax bands A-D will receive a £100 energy payment this winter. However, chief executive Holly Williamson (pictured left) says it’s “hugely disappointed” that Local Housing Allowance remains frozen.

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“This decision also brings into question the government’s goal of ending rough sleeping, as it will mean there are very few affordable long-term homes for people currently sleeping rough,” she says. “The government must tackle the root cause of the rental affordability crisis in our country by limiting annual rent increases, ensuring rents cannot continue to rise faster than wages and helping reduce the long-term cost to the taxpayer.”

The NRLA says the inaction on LHA along with the increase in property taxes will translate to a double blow for low-income renters.

Chief executive Ben Beadle (pictured right) adds: “The idea that the government is providing breathing space for any rented households is just a farce. Tax hikes leading to higher rents, coupled with doing nothing to unfreeze housing benefit rates will leave low-income renters hit hardest by the Budget. Quite simply, this is a regressive Budget for renters.”  

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