House prices are again on everyone’s lips with interest rates forecast to rise. But Alison Thain, of the region’s largest housing supplier, says policymakers should look at new ways to help people take a first step on the housing ladder

"HOUSE price bubble”, “House prices in London rising by £4,500 per week”, “House prices are destabilising the economy” – these are just three headlines from newspapers in the last few weeks which show how the housing market is once again top of the news agenda.

The latest figures show house prices across the country in April were up eight per cent on the same time last year, although in London they rose by 17 per cent.

London and the south-east, where there is a stronger population growth and which is part of a worldwide property market for billionaires’ properties, are having a grossly distorting effect on the housing market.

Here in the North-East, house prices have seen modest – and sustainable – rises.

House prices are not a significant issue just because they are the topic of middle class dinner parties. Housing is also a critical issue in terms of the wider cohesion of our society. For generations of Britons, poor housing has been at the heart of social problems.

The two issues that have been the focus of policymakers’ attention are the availability of finance to housebuyers and increasing the supply of high quality housing stock. We have seen the Help to Buy schemes aimed at first time buyers, and incentives aimed at encouraging local councils to grant planning permission to build more homes.

My belief is that choice of tenure is also important. Not everyone wants to take out a 25-year mortgage and start climbing the property ladder.

But making the choice to rent should not result in people settling for second best when it comes to quality and location.

Let’s consider the issues. People often misunderstand Help to Buy. The programme known as Help to Buy 1 is going to be in place until 2020. It offers equity loans to buyers of new homes. It was launched in April 2013, and has helped nearly 20,000 buyers, 87.5 per cent of which are first time buyers, and overwhelmingly they are outside London and the south-east.

In October 2013, Help to Buy 2 was launched. It offers help to people buying any property, not just new build. In its first three months it guaranteed 2,572 mortgages, again overwhelmingly to first-time buyers, and with an average house price of £148,048. There is talk of scrapping it, or even reducing the maximum house price it can help buy from £600,000 to £400,000. This might make policymakers feel better but it wouldn’t change things much – except to reduce help to those wanting to get on the housing ladder.

THE meat and drink of the housing issue is the supply of new homes.

This is the area in which my company, Thirteen, is able to play a critical role in the North-East. Thirteen was created in April 2014 from the merger of two respected North-East housing groups, Fabrick and Vela, into a single, stronger organisation, and we work with our “partner landlords”, Erimus Housing, Housing Hartlepool, Tees Valley Housing and Tristar Homes.

Together, we own and manage more than 32,000 homes from North Tyneside to York.

We house one in ten people in the Tees Valley, which makes us the largest group of housing associations in the North East – and in the top 25 nationally. We are also one of the ten largest employers in the North-East.

The new group has formidable financial resources. We plan to build more than 2,500 homes between now and 2018, with at least 1,285 going up before the end of next year.

Perhaps more importantly, we have devised a new way in which people can buy or rent their new homes – it is a “rent now, buy later” scheme. It is aimed at those people who can get a mortgage but struggle to raise the deposit that lenders require.

Our customers rent the new-build property from one of Thirteen’s partners at 80 per cent of the market rent, which allows them to save more towards their deposit. Once they’ve got the deposit, they can purchase the house they have been living in.

We expect that between 15 per cent and 20 per cent of our customers will choose this “part rent part purchase” route to ownership.

This proves that there are innovative and flexible ways to offer homeownership that cannot to be attributed to playing a part in creating a London-style “housing bubble”

that has the potential to affect the whole country.

Policymakers need to reflect on the wider UK before changing gear too quickly. A London housing boom can be tackled by restricting incentives to postcodes rather than by abolishing them altogether. Perhaps policymakers should look to regions like ours and encourage new ways for people to take their first steps onto the property ladder.

  • Alison Thain is chief executive of the Thirteen Group.