When it comes to the government’s view on how best to help first-time buyers, you can’t argue that there’s a level of consistency at the moment. Take, for instance, the announcement that was made just before Christmas of a £60m fund for councils across England to use in order to “encourage affordable housing” in their areas.
In terms of distribution, it was those regions who have the highest number of second-home owners who will be getting the lion’s share – notably, the South West and South East where, for example, we have communities (particularly in Devon and Cornwall) where large numbers of holiday homes are owned.
Indeed, when the fund was first announced it was specifically for “community-led housing developments in coastal and rural areas” – although it’s been broadened out since then – under the presumption that large numbers of second home owners are snapping up properties ahead of locals and, in turn, ramping up prices in the area to make it much more difficult for those very same local people to get on the ladder.
Thus, we have this new £60m fund – ironically the money coming from extra stamp duty revenues from the government’s decision to up charges on the purchase of additional properties – which will now be divvied out to councils in the hope that they can support groups to build more affordable properties that, one presumes, will only be available to those deemed ‘local’ enough. Or perhaps they will only be offered to genuine first-time buyers?
The detail has yet to be announced however we can see a clear government strategy here in blaming additional property owners – whether they are buy-to-let landlords or second home owners – for the lack of affordable housing and taking property off the market which ordinarily would be earmarked for locals. Now, I’m not suggesting there isn’t some semblance of truth in this but there are still a number of questions that need answering.
Firstly, while the extra money will of course be welcome, how are councils going to turn it into affordable homes and what is the definition of “affordable”? As mentioned above, who will be able to buy such homes? And, rather importantly from our perspective, what finance will be available for them to do just that? Also, where is the land coming from to build on? Who is going to do the building? What level of affordable housing is achievable with the money and is it enough?
The money we are told is going out to community-led housing groups and there appears to be a commitment here to having communities decide on their housing requirements. But, given what we know about the delivery of new housing right across the country, will they come up against the same obstacles that all others in the same boat have been dealing with for some time?
Clearly, money for more affordable housing is excellent news, if it can be translated into the right types of homes, in the right areas, for the right people, who have the right means to be able to afford these homes. To my mind, it will be interesting to see how the financials are worked out on this – what will the properties cost? Will there be subsidies for purchasers? Will this work as part of Help to Buy 1 or separately? If separately, can we anticipate that mortgage finance will be readily available for those seeking high LTV loans?
To be a success in house building in this country, you need a joined-up strategy beyond the provision of money to a community group to ‘encourage’ housing. Might I be as bold as to suggest that encouragement is a very different beast to delivery, and therefore let’s not under-estimate the level of work involved to get all stakeholders involved and singing from the same hymn sheet. One also must wonder, whether this is a one-off? If so, then while helpful, it is perhaps a drop in the ocean in terms of the greater requirements for UK house-building, the problems of which run much deeper and require much more resources and money to fix.
Pad Bamford is business development director at AmTrust Mortgage Insurance