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Cameron set to scrap affordable homes quotas

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Prime minister David Cameron is set to renew his party’s pledge to build 200,000 starter homes by scrapping developers’ requirements to build affordable, rented homes

The promise of 200,000 first-time buyers’ homes by 2020 was first made in March as part of the build-up to the general election.

But at the Conservative Party conference later today, Cameron is set to announce plans to to scrap the requirement to build affordable homes to rent in developments as part of the drive to build this housing.

Under the plans the definition of what is classed as affordable housing is set to change to not just include rental properties – as it does currently - but also starter homes.

These starter homes will be available to first-time buyers under the age of 40, and must be 20 per cent below the market rent.

Heralding the changes as a move from ‘generation rent to generation buy’, Cameron is set to say: ‘For years politicians have been talking about building what they call affordable homes but the phrase was deceptive.

‘It basically means ones that were only available for rent. What people want are homes they can actually own.’

The move is likely to go down well with developers but housing action groups are less likely to be impressed.

Back in August charity Shelter had said that the government’s starter homes would be unaffordable for families in 58 per cent of local authorities across the country by 2020.

Further comments

Stewart Baseley, executive chairman of the Home Builders Federation  
‘We welcome the Government’s plans to deliver on its pledge to improve home ownership opportunities for young people. Over the past 25 years, as building new homes has become ever more costly and complex, output has fallen and the housing ladder has slipped further out of reach for many. 

‘Greater flexibility in the way affordable housing is provided should not only speed up the process of securing an implementable planning permission but also make more sites viable for new housing. This will in turn increase availability of homes of all types and help address the chronic shortage that has been allowed to develop.Housebuilders are committed  to delivering high quality, low-cost homes for a new generation of first-time buyers, if the policy environment allows them to.’

Mike Roberts, managing director, HAB Housing
‘In principle HAB strongly welcomes a more dynamic definition of affordability that will help people onto the housing ladder. It is however clear that even discounted market housing will remain out of reach of many, so this needs to be just part of much wider efforts to increase access to housing for all. We also warn Government against falling into the trap that quantity needs to be at the expense of quality; we need to be creating great places, where people can have a great quality of life.

‘Rapid clarity is now essential. A prolonged period of uncertainty will only result in developers sitting on their hands and fewer homes being built. Likewise the UK cannot afford to have any form of stand-off between Local Authorities and central Government.’

Luke Jooste, head of real estate finance at Funding Circle
‘All of the political parties have failed to address a major issue holding back housebuilding: a lack of finance for small developers, who are the bedrock of a healthy market. To meet demand, Britain needs to get finance to more small developers, whose market share has fallen from two-thirds in 1988 to just over a quarter in 2013.

‘Large developers can only meet 50 to 60 per cent of demand, yet smaller developers continue to struggle to access finance through high street banks due to capital requirements and legacy issues from the financial crisis. More needs to be done to make small developers aware of the alternative finance options available to them. Online marketplaces are able to deliver the same level of credit assessment in a matter of weeks rather than months.’

Andrew Jones, practice leader, AECOM
‘The government’s attention is now finally turning to addressing the housing challenge, with political noise now resulting in action. There has been an announcement almost every week since the election. We welcome all initiatives to accelerate home building, particularly at the affordable end of the spectrum, but the drive for home ownership must not be at the expense of the affordable rental sector.

‘Shifting the ‘Affordable’ definition to include Starter Homes for first-time buyers could exacerbate rather than solve the problems of affordability and access to the housing market. Without a blended, multi-tenure approach there is a risk of increased land values rather than increased supply, particularly in London and the South East. And shared ownership schemes – one of the most successful stepping stones to affordable home ownership – could be severely challenged as a result of today’s move.

‘Over the past century, supply has only increased through a balanced mix of housing tenures. History shows us that the private sector alone cannot deliver the step-change required to solve the housing crisis for the next generation and beyond. We need a strategy that extends the breadth of development actors – reintroducing SMEs and specialist entrants, but also looking to development corporations and new towns to get the step change we need in delivery.

‘The underlying problem of supply remains. The government’s current proposals should stimulate the delivery of homes on sites already identified for development, but there is still a fundamental lack of supply in the parts of the UK where demand is critical and future economic prospects are strong.

‘The UK needs a joined-up approach to housing, with homes built in line with infrastructure investment and development, so that people can live close to employment opportunities and new communities can flourish.’

Jason Lowes, partner, Rapleys
‘The Prime Minister’s announcements are likely to come as little surprise to developers and planners – this is just the latest in a long line of reforms aimed at moving away from the historic social housing format of low rent, for the long term.

Given the nature of the speech, the Prime Minister was perhaps understandably light on the details, but these raise as many questions as he has answered. The detail to come will be key in how attractive this is to developers in practice, as will the price and age thresholds that will be imposed, which at first blush seem somewhat arbitrary. The issue of shared ownership was a notable absence. This has been the preferred method of providing affordable housing for many developers, and how this model fits into the Prime Minister’s plans will be crucial.

We await more details as to how these proposals are going to work in practice, with the forthcoming Housing Bill hopefully shedding further light on matters. Until then, speculation will be the order of the day in terms of what is likely to lie ahead.’

  • 5 Comments

Readers' comments (5)

  • Ben Derbyshire

    This measure is a symptom of the democratic deficit that afflicts housing policy. It may well be a politically expedient conference speech to reward the faithful with a boost to the 'property owning democracy' - fair enough, in a way - the Tories are in power, after all.
    But this policy must not be passed off as a solution to the housing crisis because it merely robs renting Peter to pay owning Paul.
    Why the democratic deficit? Because until we have the wherewithal both to subsidise additional housing supply and to make available more land for housing we will not begin to see a supply side solution to the problem.
    Politicians are reluctant to admit this fundamental truth. Instead, as in this case, they are left moving the deckchairs around as the ship slowly founders.
    Ben Derbyshire.
    Managing Partner, HTA Design.
    Chair, The Housing Forum.

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  • I'm not sure how scrapping developers' requirements to include affordable homes within their developments assists the government starter homes project?

    And what provision is there for those over the age of 40? Some of these starter homes are aimed at people earning no more than £71K. I'd say that if you earn that much you don't need assistance. It's people earning less than £40K that need assistance. I think this government's housing policy continues to be very worrying and short on policies that will alleviate the growing crisis.

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  • The Conservative Party’s enthusiasm for ownership over rental as some kind of ‘quick fix’ for the ‘housing problem’ is laughable and the stigmatisation of the rental market is depressingly naive.

    It is hard, but not impossible, to imagine a socio-economic climate in London where there is no housing ‘problem’. As things stand there will always be (as there always has been) an unfulfilled need. It is wrong to imagine there is a ‘solution’, there will only ever be a gradual attempt to increase and improve the housing stock. These efforts will always fall below expectations. In a turbulent world, London is one of the most desirable Cities to live and invest for all kinds of obvious reasons: The historic building stock, political stability and security, the legal system and the rule of law, culture, infrastructure, education, the health system, the Parks, employment etc.

    Simon Jenkins is worth reading on this subject for a shot of sense beyond the sound bites. He touches on the low density of our existing housing stock, the amount of unused space within occupied housing, the amount of ‘investment’ purchasing with houses lying empty and the amount of under developed land. All could be addressed through legislation but the political will is lacking.

    The ways of making London housing more affordable might include:

    1. Make London more like Paris: increasingly regulated and less supportive of initiative. People would go somewhere else, possibly back to Paris.
    2. Make London more like Bagdad: dangerous and politically unstable. People would leave and wouldn’t invest. Property prices would nose dive.
    3. Make the distribution of wealth in the U.K and worldwide more equitable: this would drive down the price of housing and give individuals more power to make their own choices
    4. Make other countries more attractive, safer, more stable places to live: the demand to come to London would decline and prices would fall.
    5. Build densely packed industrial buildings and tenements on the outskirts of the City and let immigrants, artists, students and the homeless occupy them at any density they choose without the need for planning approval. Build good transport links 20 years later.

    The London housing ‘problem’ is the result of a range of national and international phenomena. Until these change, London will continue to be a vibrant, buoyant, complex, pluralist, inequitable, evolving and attractive City with a housing ‘problem’
    Charles Thomson Director Studio 54 Architecture

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  • This is a move to further divide society through housing, so no more attempted co-location of rich and poor. Together with what is happening in health and education this is bad news and will deeply divide the UK. Starter homes will not be built in areas with the best job prospects. Sorry for stating the obvious.

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  • this initiative may assist to a limited extent. Fundamentally the UK is monocentric with London at the centre. The Netherlands is an exemplar of a multicentric economy. There is plenty of reasonably priced stock in Derbyshire and Staffordshire, Lancashire and Yorkshire but sadly an acute lack of employment opportunities. We must do more to tackle this inbalance. Talk of HS2 and building a Northern Powerhouse is a start. We need more tax breaks in the form of Stamp Duty breaks and Enterprise (to take 2 examples) to get the north moving. We need to revisit our approach to second home ownership. Why are house prices in some regions of Cornwall on a par with Surrey? There is very little employment in Cornwall outside of tourism, fishing and agriculture. When we create the employment then regeneration can follow. Another issue, rarely discussed, is a review of the law of land tenure. In effect land tenure is still rooted in the 1925 Law of Property Act and common law. Leashold needs further reform and maybe we need to see if there are other forms of tenure. Land assembly is a serious impediment to the regeneration of previously developed land. Compulsory Purchase and Land Tribunal are painfully slow and benign. Can it be fair that a landowner or former owner can impose covenants to restrict the uses of land for generations to the detriment of communities? And maybe Principal Private Residence tax relief needs tweaking. For example if you sell your main home and bank a large gain then you should be taxed on the gain you don't purchase another home (say) 2 or 3 years - such schemes exist elsewhere in Europe. Enough said.

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