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by Amelia Williams, Product Manager, Mortgage Policy and Proposition Development
12 March 2024
Associate Feature: How do we lay the groundwork for a green housing revolution?

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Associate Feature: How do we lay the groundwork for a green housing revolution?

The housing market is in crisis. The current market is unsustainable and requires intervention to deliver the clean, affordable, and comfortable homes that people need to live decent and happy lives. Recent polling for the Scottish Federation of Housing Associations showed 80% of the public think Scotland is in a housing crisis and believe there is not enough affordable housing – with Scotland’s target to build 110,000 homes by 2032 ‘at risk’.

No wonder, then, that over the next five years it’s estimated that across the UK 426,000 people who could have been first time buyers (FTBs),  will be unable to buy a home.

This would be a bad enough moment for the housing market, if it wasn’t for the simultaneous need for homes across Britain to decarbonise. British buildings are leakier, colder, and damper than anywhere else in Europe, and if policymakers are to tackle the climate challenges of coming generations, housing stock across all tenures will need to be heated with cleaner energy.

This is why Nationwide has four major calls to reset the agenda – two to tackle access to home ownership, and two to tackle the thorny problem of decarbonisation.

First should be a comprehensive review of the FTB market to produce new ideas on how to increase housing supply sustainably. This should include measures to support mortgage lending at higher loan-to-income ratios safely and sustainably, in addition to consideration of planning reforms and home supply.

Secondly, the concept of Help to Buy needs to be revisited and reintroduced. It was a success, encouraging young people to save and putting house-buying at the front of mind and providing fairer access to mortgages for those without parental support. 

The Scottish Government’s Low-cost Initiative for First Time Buyers provided much needed support to not just those taking their first step on the property ladder, but also people from a range of other groups that may need support. We would like to see this scheme expanded and partnered with further support solely for FTBs. 

We have also called for the UK Government to reintroduce an updated Help to Buy ISA. The monthly deposit threshold should be raised from £200 to £500 and a proportionate increase in the redeemable bonus made in line with increases in house prices, alongside mass housebuilding across all tenures to ensure supply increases at a rate that prevents further house price inflation.  

Thirdly, a new long term grants programme to support retrofit needs to be introduced for owner-occupiers and landlords. Currently, only around 11% of Scottish households have a low carbon heating system and the Scottish Government estimates that around 50% of homes will need to convert to a low carbon heating system by 2030. Yet the costs of retrofit currently disincentivise essential action and limit the scope of the market, so a fair and accurate programme of grants is vital. Its creation and long-term provision would also provide confidence in government’s commitment to retrofit and stimulate the supply chains needed for the retrofit industry to become an economic powerhouse.

While it’s critical that all homes are decarbonised, exemptions which give FTBs longer to act or more financial support would be welcome to ensure they are not placed under undue financial stress.   

Finally, the energy market requires intervention to balance the cost of gas bills relative to electricity, as this currently makes air source heat pumps economically unviable for most. To encourage the right behaviour from consumers, these bills could be rebalanced to provide more evidence to consumers of the financial viability of retrofit – as well as the essential changes to support a healthy climate.

No single reform can address the scale of the challenge the housing market faces – but together, these reforms will provide the basis for a revitalised market which works for people across all tenures and income levels. 

This article is sponsored by Nationwide

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