“The proportion of people aged 35-44 owning their own home is now UP. From Stamp Duty cuts to Help to Buy, it’s Conservatives who’re helping more people get a foot on the housing ladder”
That’s what the Conservatives tweeted yesterday. But they’re only telling half the story.
“The proportion of people aged 35-44 owning their own home is now up”
We’re told that the proportion of homeowners is “now up”, but that begs the question: compared to when?
The Conservatives told us they were talking about the English Housing Survey results, which were published yesterday by the government. Those figures show that 57 per cent of this age group owned their own homes in 2017-18, a five-point increase on the previous year.
But those same stats show that home ownership among 35-44 year olds is still way below where it was in 2007-08, when 71 per cent were owner-occupiers.
And the Conservatives’ tweet didn’t mention that “there has been a considerable increase in the proportion of 35-44 year olds in the private rented sector (from 13% in 2007-08 to 28% in 2017-18)” according to this latest report.
The Conservatives’ claim that “the proportion of people aged 35-44 owning their own home is now up” is misleading without further context.
It doesn’t make clear to the reader that it refers to a change in home ownership rates between 2016-17 and 2017-18. By focusing on this very short time frame, the Conservatives have ignored the wider picture: home ownership among people in this age group is significantly lower now than it was ten years ago (57 per cent now compared to 71 per cent then).
“From Stamp Duty cuts to Help to Buy, it’s Conservatives who’re helping more people get a foot on the housing ladder”
Are more people getting on the housing ladder? Again, the Conservatives haven’t said in their tweet when they’re comparing it to.
Analysis from the Yorkshire Building Society using figures from the banking trade body UK Finance suggests that the number of mortgages being approved for first-time buyers was at a ten-year high in 2018.
But this week’s government figures show the number of first-time buyers is much lower than it was 20 years ago — with 785,000 in 2017-18, compared to 922,000 in 1995-96. (Although it’s worth saying that most of this drop happened in the late 1990s and early 2000s, with figures staying flat between 2006 and 2016, and rising in the last two years.)
Indeed, as a proportion of all households, it’s not clear that the Conservatives have much to show off about: in 2010-11, when the party took office, 66 per cent of households were owner-occupied. In 2017-18, that figure was 64 per cent.
And it’s much harder than it used to be to buy a house. According to this week’s government figures, “compared with a decade ago, today’s first time buyers are older [and] more likely to buy with a partner”. The report suggests that the rise in the proportion of first homes bought by couples “may be due to an increasing need for two incomes to be able to buy”.
This is consistent with a recent report by the independent Institute for Fiscal Studies, which found that “the last 20 years have seen a substantial fall in home ownership among young adults [and] increases in property prices relative incomes have made it increasingly hard for young adults to raise a deposit.” In other words, wages are not keeping up with house prices.
Nevertheless, it looks like the last couple of years have seen an uptick in the number of first-time buyers (notwithstanding the major caveats we’ve already set out). Is this — as the Conservatives suggest — thanks to Help to Buy and cuts to stamp duty?
The party told FactCheck that “property sales on homes that qualify for stamp duty relief were up by 4 per cent on last quarter”, and referred us to a report published by HM Revenue and Customs yesterday.
Government figures from August 2018 showed that a combined 420,000 people have used the Help to Buy schemes since they launched in April 2013. In July, the government said that cuts to stamp duty had already saved 121,500 first-time buyers a total of £284 million.
This appears to suggest that hundreds of thousands of people have bought their first homes thanks to these schemes. But as regular FactCheck readers know, correlation does not equal causation.
Can we prove that any or all of those 420,000 people using Help to Buy actually needed it to get on the housing ladder? Did the stamp duty change actually make the difference between being able to afford a home or not — or are people saving money on a transaction they would have made anyway? How many of those people would have been homeowners even without the policies?
The housing charity Shelter has criticised the Help to Buy scheme for, according to the organisation’s CEO Polly Neate, “barely doing anything to help the first-time buyers it is targeted at, and nothing to help those most in need of an affordable home.
“By inflating house prices and subsidising huge corporate pay outs it is actually making matters worse.”
In August, government figures revealed that more than 6,700 households earning over £100,000 a year have bought homes using Help to Buy. And families with incomes over £50,000 make up 40 per cent of users. It’s hard to make the case that those individuals would not have been able to afford a home without Help to Buy.
And as FactCheck found when the policy was first announced in November 2017, the on-paper savings from the stamp duty changes are very small. For example, the average first-time buyer in London needs a deposit of £106,000 — the policy only knocks off £5,000 from this bill. In Yorkshire, where average deposits are just under £20,000, the stamp duty saving is just £100.
At the time, the independent Office for Budget Responsibility pointed out that only 3,500 people would bring forward their decision to buy a home as a result of this policy. And they also said that house prices would rise by 0.3 per cent, cancelling out any savings that buyers made.
The Conservatives suggested that their policies (specifically Help to Buy and cuts to stamp duty) have put more people on the housing ladder. We think this is misleading without further context.
It’s true that there has been an increase in the number of first-time buyers in the last two years.
But the Conservatives don’t mention that the number of first-time buyers is down significantly compared to 20 years ago (922,000 then versus 785,000 now). And since the party took office in 2010, the proportion of all households that are owner-occupied has also dropped slightly (66 per cent to 64 per cent).
We’re not sure that it’s fair for the Conservatives to suggest that the uptick in new homeowners in the last two years is down to their Help to Buy and stamp duty policies.
So far, there’s no conclusive proof that these schemes actually made the difference between those people being homeowners or not. In fact, the stamp duty changes may have cancelled themselves out by triggering a small increase in house prices, negating the tiny on-paper savings for first-time buyers. Meanwhile, a significant proportion of people using Help to Buy loans are already earning well above the national average.