Stuart Trow, Columnist

Helping People Buy Homes Won’t Fix the U.K.’s Housing Crisis

The government first needs to tackle the shortage of affordable properties to rent.

March 29, 2021 at 6:00 AM UTC

Stuart Trow is co-host of “Money, Money, Money” on Switch Radio and author of “The Bluffer’s Guide to Economics.” Previously, he was a strategist at the European Bank for Reconstruction and Development.

Rethink that budget.
Photographer: Tolga Akmen/WPA Pool/Getty Images Europe

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When U.K. Chancellor of the Exchequer Rishi Sunak announced his budget earlier this month, he included a mortgage guarantee scheme that promised to help more people become homeowners1. Under the scheme, banks will be incentivized to offer more 95% mortgages and at better rates, since the government will indemnify against some of the risks.

The goal, as stated by Prime Minister Boris Johnson, is to turn “generation rent into generation buy.” It’s well timed considering the average home in the U.K. now costs more than eight times average earnings. But, unfortunately, it won’t solve the real housing crisis in the U.K., which is a greater shortage of affordable properties to rent rather than to buy.