'Affordable' housing that isn't

In what looks suspiciously like an attempt to garner a few favourable headlines before the full gruesome fine details of today's Autumn Statement are fully exposed, the Treasury last night put out a release unveiling the Chancellor's plan to turn 'Generation Rent into Generation Buy'.

George Osborne will commit to building over 400,000 new homes across England by 2020/2021, costing £6.9billion, claiming it will be the 'biggest affordable housebuilding programme since the 1970s'. To achieve this, he will say that the government will be doubling its housing budget and encouraging private developers to build affordable homes.

Of these, the government says 200,000 will be starter homes, aimed at first time buyers under the age of 40 and to be offered at a 20 per cent discount.  They would have a maximum, and apparently 'affordable', price of £250,000 outside of London and £450,000 in the capital.

It is, inevitably, just the latest repackaging of a reannouncement of a reannouncement of an announcement  on this issue. But, the starter home scheme remains beset by the same problems; largely that they remain far too expensive.

In October this year, Shelter did a study of the policy and demonstrated only higher earners are likely to benefit. It found, at 'current average lending ratios':

In England, you'd need an income of £50,000 and a deposit of £40,000

In London, you'd need an income of £77,000 and a deposit of £98,000

If you secured a 95% mortgage on a Starter Home

In England, you'd need an income of £59,000 and a deposit of almost £11,000

In London, you'd need an income of £97,000 and a deposit of almost £20,000

The study went on:

'This is out of reach for low and middle earners, especially families. Only higher earners, in the top 30%, have much of a chance, and in London only then if you're a couple with two high incomes. Even then, that assumes that you've already got a hefty deposit saved up. For families without deposits, only the top 10% of earners will stand a chance.'

It seems that aiming at these small, comparatively wealthy, groups is what passes for an 'affordable' housing policy.

The full comments from Shelter can be found here. 

Update

It won't be a surprise to many, but the Greens are understandably unimpressed by Osborne's 'affordable' housing plans. In a statement released this morning, London Assembly member Darren Johnson said:

'This budget won't offer anything to most of Generation Rent in London, for whom buying a home is a bad joke, muich like the term "affordable housing". Renters need secure tenancies and rent controls so they can stay put and save a deposit, curbs on property investors who are driving up house prices, and investment in social housing for renters on low incomes.

'This review also marks the end of investment in affordable housing in inner London, where the housing crisis is worst. The chancellor has turned his back on Londoners who are overcrowded, in poverty due to housing costs, and homeless.'

I expect Green MP Caroline Lucas to make much the same arguments later today.


Postscript

Another figure you won't hear from George Osborne today is a prediction from the Centre for Economics and Business Research (CEBR). In a report published today, the organisation reckons that not only will the chancellor miss this year's deficit target of £69.5billion, he will also fail to return the UK to a surplus by 2020.

Blaming weaker than expected growth, the CEBR predicts the deficit will be more than £18billion in 2021, rather than the £11.6bn as predicted by the Office for Budget Responsibility - a black hole of £30bn. After missing most of his main economic targets during the Coalition government, is Osborne going to do it all again?