In the past, the UK Government has relied on schemes like Help to Buy to address the housing market’s challenges.
While these efforts were well-intentioned, they failed to solve the deeper, structural issues that keep the market in gridlock.
Today, lenders are leading the way in tackling deposit and affordability challenges by taking on some of the burden themselves – just look at the innovation from Accord and Skipton.
Yet, these innovations alone cannot address the root cause – insufficient housing stock – which Labour must address in the Budget if we’re ever going to see the change we need.
The “stuck ladder” problem
One of the most pressing challenges facing the UK housing market is the “stuck ladder” situation.
Many older homeowners cannot downsize because high Stamp Duty costs make moving financially prohibitive. This traps larger-family homes in the market, keeping them out of reach for growing families and affecting the chain for first-time buyers.
To break this cycle, the Government needs to rethink its approach to taxation, particularly Stamp Duty.
A more creative tax strategy could free up this valuable housing stock, easing pressure across the housing chain.
This wouldn’t just ease the burdens on individual homeowners – it would address the structural mismatch between the current tax system and the realities of the housing market.
We need policies that support smoother transitions within the market, allowing the right homes to be in the hands of those who need them and giving those at the top of the ladder the freedom to downsize and reap the benefits of doing so.
Moving beyond Help to Buy
Schemes like Help to Buy were initially successful in providing a path to homeownership for many, but they ultimately failed to address the larger issue of housing availability. They were a band-aid on a wound that required surgery.
To genuinely address the challenges in the market, the Government must encourage large-scale house-building that boosts the overall supply of homes.
This means not just focusing their efforts on first-time buyers and considering the needs of the entire market— second-home seekers, landlords and downsizers alike.
While beneficial in some ways, Help to Buy had unintended consequences. In some instances, It created a ‘two ladder’ market where new-builds operated in their own bubble, sometimes driving up prices without solving the underlying stock problem.
This left the wider market largely unchanged and unaddressed, creating a divide that continues to impact potential buyers today.
Learning from the market’s innovation
Meanwhile, lenders have stepped up to address the affordability challenge in new and creative ways. Examples like Accord and Skipton offering 100% loan-to-value (LTV) mortgages or accepting notional deposits show that the private sector is already finding ways to support first-time buyers.
Yet, as innovative as these solutions are, they can’t overcome the fundamental issue of a limited housing supply.
Lenders can somewhat solve the affordability problem, but only Government intervention can address the stock problem.
The market has changed since Help to Buy was introduced. House prices are no longer soaring; buyers can’t rely on rising equity to clear loans. In today’s environment, any new Government intervention must be mindful of these shifts and consider the broader market landscape to avoid pushing affordability issues further down the line.
A challenge to Rachel Reeves: Delivering a three-year plan
Rachel Reeves has a unique opportunity to break from the past and lay out a long-term housing strategy that delivers results.
We need a three-year plan, with clear targets and visible progress within the first year, that could restore faith in Government efforts to address the housing crisis.
For too long, previous governments have failed to meet their housing promises. By focusing on achievable, short-term wins that build toward a larger goal, Reeves could make a tangible difference quickly.
Improving the buying experience
Let’s not forget the other problems that are bubbling up under the surface: the home-buying experience. Even if we solve the stock and affordability challenges, the home-buying process itself remains slow and stressful.
Government action could play a crucial role in streamlining this process, making the journey to homeownership less daunting for buyers.
With a renewed focus on both private and social housing, delivering the Government’s ambitious target of 1.5 million homes hinges on public and private sector output working in tandem – a critical step towards alleviating the housing crisis by building homes that buyers need.
The UK’s housing market needs more than another scheme – a coordinated, holistic approach that addresses the long-standing structural issues.
Lenders are already innovating, but they can only go so far. The Government must address the supply problem, rethink policies and set the stage for a healthier, more balanced market.
It’s time to unlock the housing market for everyone, and this starts with a bolder vision from those in power.
It will be interesting to see what comes on the 30th, but for real change to happen we need more than just a first-time buyer focus.
Nathan Reilly is director of Twenty7tec
