The Governments Housing White Paper – What does it mean for you?

On 7^th February 2017, the Government released its housing white paper “Fixing our broken housing market”.

The paper has received mixed reviews, but most feel it simply doesn’t address the fundamental issues facing the market, and offers little in terms of solutions.

In this initial article, I will simply focus on what the paper outlines, and we will address their suitability in future articles.  I have added additional commentary in blue.

 

Why is the Housing Market Broken?

 

The according to the government paper, the market is broken for the following reasons:

·         We don’t build enough homes – Since 1970,we have built on average 160,000 per year when we need to be building 275,000.

·         Housing is increasingly unaffordable. Today’s average house costs 8 times average earnings.

·         Planning permission takes too long.

·         When permission is granted, building takes too long.

·         By 2020, only a quarter of 30-year-olds will own their own home.

·         Rising rents make it even harder to save for a deposit.

 

Comment: We agree that we need to build a lot more properties. Simple supply and demand means the lack of available housing to rent or buy will simply continue to push up prices. Other factors such the economy or Brexit may interrupt this, but the trend is clear.

 

What is the Government proposing?

 

1.      Planning for the right homes in the right places

 

Essentially, build more homes!

 

·         Update community plans and hold them accountable

·         Simplify the planning process

·         Make more land available for building such as brownfield, surplus public land, regenerating estates and releasing more small and medium-sized sites.

·         Controversial plans for green belt land were dropped prior to the papers release, but it does address building on brownfield sites located within green belt areas.

·         Use of land for housing higher densities of people

 

2.      Building homes faster

 

·         Improving the speed and quality with which planning cases are handled

·         Ensuring required infrastructure is provided on time using a government housing infrastructure fund.

·         Speeding up the connection of utilities to new properties

·         Removing unnecessary delays caused by planning conditions and exploring better ways for developers to contribute to infrastructure.

·         Address the skills shortage in the construction workforce

·         Hold local authorities to account through a new housing delivery test.

 

3.      Diversify the market

 

·         Reduce the markets reliance on the top 10 builders by supporting small and medium-sized builders through the Home Building Fund.

·         Support the ability to custom build you own home by providing access to land and finance.

·         Bring in new contractors to build more quickly than traditional builders who embrace innovative and efficient methods.

·         These types of construction methods may not be suitable for current lending, and may still be unaffordable or unsuitable for first time buyers. 

·         Encouraging more institutional investors and housing associations to build housing for rent to buy and family friendly tenancies (e.g. longer term tenancies)

·         It is worth noting here that government plans to offer family friendly tenancies of 3 years or more, only appear to apply to these “build to rent” developments, and do not apply to existing properties and ASTs in the Private Rental Market.

·         Helping local authorities and housing associations to build more properties.

 

4.      Helping people now

 

·         Continue to support first time buyers through Help to Buy, Help to Buy and Lifetime ISAs and Starter Homes.

·         Help through the Affordable Homes Programme with schemes such as shared ownership and the ability to purchase home from your housing association and building more affordable homes in areas that need them.

·         Helping renters through measures such as removal of tenant fees, continuing to improve the quality of rental properties, cracking down on rogue landlords and agents and offering longer rental periods.

·         We do not expect the ban on tenant fees to come into effect until 2018, however, based on what happened in Scotland 3 years ago, we have to assume this will happen. This will require a period of consultation and then legislation will need to go through parliament. It will impact agency fees, reference fees, check in and check out fees and tenancy renewal fees.

·         Last but not least, is a review of leasehold, and in particular a review of a recent practice if selling houses with leaseholds rather than freeholds, and then later selling the freeholds for profit.

 

I hope this gives you a good overview of current governments thinking. You can download the entire 102 page document here . We will look at some of these changes in more detail in future articles.

 

We are pleased to see in this white paper, recognition from the government that home ownership is not, and should not be in the future, the only option available for those looking for a new home. It is important that we have a housing market that is balanced and works for everyone, and not just those that want to own their own property.

 

We also see anything that results in more properties being built to increase supply for both the First Time Buyers market and the rental market as extremely positive. Encouraging institutional investors to help boost this market is important, but this approach should not be at the expense of the small landlords who make up the bulk of the private rental sector. In other countries where institutional investment in the private rental sector has been encouraged, it still only makes up a small part of the market. Small landlords are vital to the health of the private rental sector!