The Impact of Government Policy on Housing Tenure Choice

The global financial crisis caused house prices to fall across the UK and in many other countries. Even before the crisis, as evidenced by the increased age of first owner-occupation, younger age groups found it harder to enter homeownership due increases in the house price to income ratio. This was compounded by the financial crisis that resulted in tighter lending conditions and decreases in the maximum available loan-to-value (LTV) ratio. Whereas LTVs before the crisis could reach 100%, after the crisis the maximum available had fallen to 75%. This made access to homeownership even harder particularly for younger age cohorts who struggled to save for large downpayments.The UK government sought to simulate the housing market, make homeownership achievable, and overcome downpayment constraints via the introduction of the Help-to-Buy scheme in 2013. The scheme enabled borrowers to effectively increase their LTV to 95% reducing the downpayment hurdle. Further, it stimulated new housing development and the proportion of first-time buyers increased.Using panel data from the English Housing Survey from 2008 to 2016, our research seeks to identify the impact of this policy intervention, amongst a range of other factors, on tenure choice and transitions. In addition, it seeks to identify how impacts vary across age groups and regions and therefore provide evidence as to who and where have been impacted most by policy change.