From Rent to Own to Help to Rent: what would the Liberal Democrat manifesto mean for local housing?

Kirsty Allan is the Liberal Democrat parliamentary candidate standing in Hamsptead and Kilburn (Image: Archant)

Tim Farron today announced the Liberal Democrat manifesto entitled ‘Change Britain’s Future’ in the run up to the General Election on June 8th. The Party pledges to build 300,000 new homes by 2022 through a commissioning programme.

The landmark policy for housing announced in the manifesto is a new ‘Rent to Own’ scheme, which would enable people who cannot afford a deposit to buy their first home for the same cost as renting. The programme would allow rent payments to build up equity over time and would give renters a share in the home they are living in. Capital investment in the scheme is promised at £3 billion by 2022.

The leader of the Liberal Democrat Party said to Sky News: “This is about allowing people to get their foot on the ladder, to begin to pay rent and to lead that to a staircase up to being able to own a property, part own it, and give people that chance to become a home owner should they wish.”

Deposits in Camden have reached a staggering £83,219, 10 per cent of the average house price in the area according to a recent report by eMoov. It reported that with average wages of £60,300, the house price to wage ratio is 13.80. Requiring an average wage of £166,438, Camden has an affordability deficit as high as -£106,138.

The policy, which was left out of the 2015 campaign, is to be funded through a new British Housing and Infrastructure Development Bank which would enable housing organisations to fund construction of Rent to Own homes. Tenants would be able to convert their payments to full ownership after 30 years through the initiative.

According to the Office for National Statistics, house prices in the borough have increased by 258 per cent since 1997, whilst average individual annual earnings have risen just 68 per cent. Camden was placed in third place on MoneySuperMarket.com’s list of the most unaffordable places to live. 27 years would be spent saving for a deposit in the borough according to the the price comparison website based on average salaries.

Additionally, first time buyers would be given a leg up on to the “staircase” by a new Help to Rent scheme providing tenancy deposit loans for first-time renters under 30. Exemptions on smaller housing development schemes to provide affordable homes would be scrapped and local authorities given a firmer hand to tackle developers who don’t stump up on their promises.

The Liberal Democrats have pledged to restore housing benefit for young people aged between 18 and 21, as has the Labour Party.

To deter the practice of overseas investors buying up property and leaving it empty to accrue capital, local authorities would be able to levy up to 200 per cent council tax on second homes and ‘buy to leave empty’ properties.

House building on unwanted public sector land would be enforced and builders with planning consent who do not build after three years to allow land values to rise would be penalised.

It was recently revealed by Transparency International that the 21 storey development at City North in Finsbury Park sold 77.78 per cent of its 107 apartments to overseas investors. At 250 City Road in Islington, fewer than 14 per cent of properties were bought by a UK resident.

Local communities are put front and centre in the Liberal Democrat manifesto. A Community Right of Appeal would be put in place for where planning decisions are taken in the face of the approved local plan. Local Plans must have a 15 year plan to enable long-term development. New homes would have to be marketed to local people first.

The Camden Community Investment Programme (CIP) has already pledged such a scheme, aiming to invest £1 billion into the local community and marketing homes to local people before foreign investors, but how far it would follow through with this is yet to be seen. Council housing would be protected by ending voluntary Right to Buy schemes that sell off Housing Association homes. The borrowing cap on local authorities would also be lifted in order to allow Housing Associations to build more council homes. Camden Council argues that CIP delivery has been limited by governmental restrictions on Housing Revenue Account borrowing implemented last year.

For private renters, the Lib Dems would ban letting agent fees, as Labour has pledged to do, and cap up-front deposits. Minimum standards would be increased in rental properties and the party would support the Mayor’s’ name and shame’ database for rogue landlords. Landlords would be licensed, as Labour has pledged. Tenants would be given first refusal to buy their home if their landlord decides to sell. Three year tenancies would be promoted with an inflation-linked annual rent increase to limit unannounced rent rises.

Green homes are also firmly on the yellow agenda. Half a million affordable, energy efficient homes and ten new Garden Cities are pledged by the end of the next Parliament under the Liberal Democrats. Funding for homeless accommodation would also increased, and local authorities would have to have at least one Housing First provider.

Kirsty Allan, Liberal Democrat candidate for Hampstead & Kilburn said: “Decent, affordable housing is becoming a distant dream for far too many, nowhere more so than in London. In Camden, the cost of a home has gone from three to four times average annual earnings to 10 times, three times more than the national average.

“The huge cost of housing has created a more divided society, squeezing families, putting more strain on the most vulnerable, and forcing many in need into homelessness. Those on low wages will be forced out of London, leading to a city that is only for the wealthy. All this while homes are sitting empty and plots of land bought by developers are not being used.

“The Liberal Democrats’ manifesto is a radical plan to fix the housing crisis and help people and families have access to the decent, affordable housing they deserve.”

The Liberal Democrat manifesto feels somewhat heftier than Labour’s outing. Promising three times the number of homes by the end of the next Parliament, the Lib Dems have set themselves a tall order, and by assuring the future of green homes, the party has taken a more strident environmental standpoint.

One standout in comparison with Labour’s manifesto is the omission of mention of the leasehold market, which accounts for 76.6 per cent of Hampstead and Kilburn apartments according to the Leasehold Knowledge Partnership as of 2014.

Rent to Own sounds promising in theory, but would rely on rents remaining low enough for young professionals to afford in the first place in a borough of typically high rental values. It is, however, a refreshingly new policy for the first time buyer market in north London, where young generation renters might prefer to remain so over saving for a deposit that’ll take 27 years to save for.