The pandemic has been an emotional and financial rollercoaster for private renters, so what does Rishi Sunak’s Budget mean for Generation Rent?
Since Boris Johnson announced his four-point roadmap to ease us out of lockdown last month, thoughts about just how much the pandemic will continue to affect our lives are very much on many people’s minds.
In Rishi Sunak’s most recent Budget statement, which he shared in parliament on Wednesday 3 March, the chancellor admitted it will take a “very long time” for the UK’s economy to fully recover. Sunak set out his financial recovery plan, from extending the furlough scheme until September to continuing the Universal Credit £20 top-up for six months.
Housing was another important issue addressed by Sunak, who said that the stamp duty cut will be in place for another three months and that there will be a “government guarantee” on 5% deposits in an attempt to get more people on the property ladder.
Considering so many millennials (so-called Generation Rent) struggled with extortionate rent rates and house prices before Covid-19 was even a word, this news has got us asking a lot of questions about our housing futures. So we put them to the experts.
Will 95% mortgages help low income and first-time buyers?
“The government claims 95% mortgages will help first-time buyers,” Caitlin Wilkinson from campaign group Generation Rent tells Stylist. “But for renters on low incomes, deposits aren’t the only barrier to owning a home; they simply don’t earn enough to get a mortgage. This policy won’t help these renters and may eveninflate house prices further through increasing demand. The only way to bring prices down and help more people own their own home is through building more housing.”
And does the stamp duty holiday help first-time buyers?
“The stamp duty holiday has clearly proved popular with buyers, stimulating a boom in the market despite the challenging conditions in the wider economy,” Jo Thornhill, finance expert at MoneySuperMarket tells us. “And, crucially, it has removed another cost for many first-time buyers, making that first step onto the ladder that little bit easier.
“What it means for house prices is less clear. While there were reports of house price increases across the country as a whole as recently as last month, a lot will depend on where you are buying. For example, it’s well known that many city centre properties are more competitively priced than they were a year ago due to the impact of Covid, while many suburban areas have seen price rises with some buyers seeking to move out of busy, built up areas.”
She adds: “While we welcome the stamp duty holiday extension, looking further ahead, a phased deadline where the benefits are gradually reduced would prevent a ‘cliff edge’ scenario which puts pressure on the market overall.
“We also believe the government needs to put in place longer term support for the housing market. It’s still far too difficult for first-time buyers to buy a home and for most young adults it’s a far-off dream – particularly those impacted by furlough who have seen their wages drop by as much as 20%. The 5% mortgage guarantee scheme, touted to be proposed by the government today, looks like a promising first step and we look forward to reading more about the policy in due course.
Jo concludes: “But more action is going to be needed if want to make home ownership a reality for young adults.”
What does the government need to do for private renters?
“Rather than offering 95% mortgages that will help only a few and push house prices up even further, the chancellor should use the Budget to end the rent debt crisis that has built up due to coronavirus,” Wilkinson says.
“At the outset of this crisis, two thirds of renters had no savings whatsoever, so it’s perhaps not surprising that due to the economic shock of coronavirus over 750,000 renters are now in debt to their landlord. Many have claimed Universal Credit for the first-time only to discover the payment they receive isn’t enough to cover the rent they owe.
She continues: “If the government doesn’t act, thousands could be at risk of eviction and homelessness. Generation Rent is calling on Rishi Sunak to introduce a Covid Rent Debt Fund, which would support renters in debt, and raise Universal Credit to ensure it covers the cost of average rents.”
And what about social housing?
“One area the chancellor must consider is housing – particularly social housing,” housing charity Shelter shares in a blog post titled Fixing The Economy Starts With Home. “A strong economy, as former chancellors were keen to tell us, is built on solid foundations. There is no more important foundation than access to a safe, secure, and affordable home.
“We are not alone in seeing social housing as a vital part of our economic recovery. Today, a number of chief executives from some of the UK’s biggest companies, from banking to home improvement, come together to ask the prime minister and the chancellor to take action.”
You can find more information about housing and renting during the pandemic on the Shelter, Generation Rent and MoneySuperMarket websites.
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