It would appear that the government is delivering on one of the pledges made in its election manifesto to help tackle the housing crisis.
The Prime Minister has announced plans for 200,000 new ‘starter homes’ at discounted prices for first-time buyers under 40 to help transform “generation rent” into ‘generation buy’. Those who buy them will be prevented from selling them for up to five years to deter those looking to make a quick profit and to help developers build these properties, he has promised to introduce greater flexibility into planning rules. He argues that previous government policies around building ‘affordable homes/ really focused on forcing developers to building homes that were only really available to rent whereas this new policy will supposedly help people own their own home.
The government delivered on another manifesto pledge by introducing the Help to Buy ISA in the Budget in March, aimed at helping first-time buyers save for a deposit.
Back in September the government also said that it wanted a million homes built in England by 2020. The National Housing Federation estimated almost a million homes were needed between 2011 and 2014, but figures from over 300 local councils show that just short of 500,000 were actually built. Perhaps introducing greater flexibility to the planning process could help speed up new builds.
There’s no doubt that the shortage of homes is forcing prices up and putting the dream of home ownership out of reach of many people. Whether this new policy will work remains to be seen, however we should perhaps take heart from the success of the government’s Help to Buy scheme. The number of homes sold under this scheme hit a record earlier in the summer. Some 4,745 homes were sold under the equity loan part of the scheme in June which was the highest total since it began in April 2013.
A total of 112,803 mortgages have been arranged under Help to Buy with the majority of sales – 80% – being made to first-time buyers and the equity loan part of the scheme has been extended to 2020, which will hopefully enable more people get their foot on the housing ladder.
If the government can get this new policy off the ground and ensure that both developers and lenders are engaged with the programme, perhaps it could inject some much needed impetus to tackling the housing crisis.
Brian Coulton is head of sales at Source Insurance