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19th October 2015
So we finally have a new Housing Bill, something that has been a long time coming.
The Government have, as you would expect, been waxing lyrical about the content, claiming that it is a “national crusade to transform generation rent into generation buy”.
There was nothing released that had not already been mentioned, no dramatic surprises, but is nonetheless welcome to see the government ensuring that housing is still very much on the radar. With other parties frothing at the mouth where housing is concerned, this is likely to be one of the key battlegrounds of this Parliament and into the next election.
The focal point of the Bill is to see a total of 1 million homes built by 2020, which is certainly no mean feat. Housing Minister, Brandon Lewis, claimed that more than 230,000 households have been helped into home-ownership through government-backed schemes in the last five years, but what are they planning for the future?
The first aspect introduces the notion of “Starter Homes”, which are new properties that will be built on designated development areas, such as under-used commercial land or vacant sites, and will be available at a 20% discount to first-time buyers for properties worth up to a maximum of £450,000 within London and £250,000 around the rest of the country.
For affluent first-time buyers, this is certainly good news.
But, for those who are on low incomes, a 20% discount of the average cost of a new home to a first-time buyer (£215,000) would still leave them with a £172,000 mortgage.
First-time buyers put, on average, a 20% deposit down which would equate to £34,400 on this particular property – a large amount for buyers on low incomes.
So the question needs to be asked, is this scheme targeting the right people if it’s only well-off first-time buyers that will be able to utilise it?
Local authorities are now required to provide the government with local housing plans by 2017, or risk facing intervention.
If plans are not submitted, the government will intervene to arrange for the plan to be written to “accelerate production”, according to Lewis’ statement.
Whilst anything that is set to speed up the delivery of local plans is welcomed, this does seem a little vague from Lewis.
There is no set deadline, other than the rather transparent “early-2017”, and what a government intervention would actually consist of is still yet to be revealed.
Revealed by Chancellor George Osbourne and business secretary, Sajid Javid, back in July, planning permission will automatically be granted to developers on brownfield sites to improve the rate of productivity.
Forming part of the government’s Fixing the Foundations: Creating a More Prosperous Nation document, the policy is aimed at building new homes quicker, whilst continuing to protect green belt land.
This comes alongside the announcement that underused office buildings will also be turned into new homes, making the best of existing buildings that are under-used or neglected.
Publication of the Bill comes just days after the government made the controversial decision to extend the Right to Buy scheme to a further 1.3 million housing association tenants from next year. Selling off social housing when more is needed does not seem to be the brightest plan and no Government has a record of replacing those that are sold off.
At least there is something happening with Housing and whether you agree with the actual proposals or not, there is finally some recognition that something needs to be done to solve a growing crises, but there are still many holes that need plugging, particularly for those on low incomes who want to get onto the property ladder.
The main issue is that we need a solid, long term housing plan and to do that we need a stable housing minister at the very centre of government, i.e., a full cabinet position, for a fixed 5 year term. They would work with cross-party support to establish a plan that can be continued over the next few Parliaments, involving building and planning to ensure more property is built.
We need a balanced mix of private ownership, private rented sector and social housing. Until we get this, anything else is just putting a plaster over a gaping wound.
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Andrew Montlake, Director and Spokesperson for Coreco, gives his honest and forthright views on the mortgage market, economy and all things property related. Monty was voted "Mortgage Personality of the year 2008", "Best Press Spokesperson" in 2011 and is the current holder of the British Mortgage Awards “Best Marketeer” title. Expect expert analysis, delivered in a down to earth style with a side helping of exuberance.