In a speech he said that there will be an overhaul of Whitehall and town hall planning rules which prevent house builders from offering low cost, affordable home ownership. Starter Homes will be sold at a 20% discount to first time buyers under the age of 40 and 200,000 will be delivered by 2020.
‘We need a national crusade to get homes built. That means banks lending, government releasing land, and planning being reformed,’ Cameron said, adding it will be part of a dramatic shift in housing policy.
One of the problems, he claimed, has been that until now affordable homes have been for people to rent, not own and developers have been tied by rules regarding what kind of affordable homes can be built.
‘Those old rules which said to developers: you can build on this site, but only if you build affordable homes for rent, we're replacing them with new rules. You can build here and those affordable homes can be available to buy. Yes, from generation rent to generation buy,’ Cameron added.
However, the British Property Federation (BPF) has urged the Government to focus on delivery of all housing tenures, not just homes to buy. The organisation has warned that, although initiatives to create more homes for sale are welcome, high house prices and the growing number of private renters in the UK means that more must be done to encourage the purpose built rental sector which it said has £30 billion ready to invest and the potential to deliver a significant number of new homes.
‘Politicians talk about Generation Rent as if it is something to be ashamed of, when this should not be the case. Countries such as Germany and the United States have thriving rental markets, where people happily live in institutionally backed, purpose built, high quality rented accommodation for many years,’ said Melanie Leech, chief executive of the British Property Federation.
‘While we are not against owner occupation, and see Starter Homes as a welcome initiative, we are aware that such a policy is stoking demand for home ownership, rather than focusing on meeting supply. Build to rent has enormous potential to deliver additional homes to the UK, and government must not overlook this in blind pursuit of making us a nation of home owners,’ she added.
According to Mark Hayward, managing director of the National Association of Estate Agents (NAEA) 200,000 new homes is not enough. ‘We first heard this pledge in Cameron’s pre-election campaign, and we still support the sentiment. However, other initiatives such as the Help to Buy scheme still remains in place and it boils down to the fact that we are still waiting to see new homes being built; and whilst we wait capacity remains stretched, infrastructure is not in place and house prices continue to grow,’ he pointed out.
He also pointed out that the NAEA’s latest housing report found that sales made to first time buyers fell to the lowest level since July 2014 and only 20% of sales were made to first time buyers in August compared to 23% in July and 24% in June, indicating movement in the market is getting tougher and tougher.
‘First time buyers have been squeezed out the market for some time, it’s taking young buyers longer to get their foot on the first step of the ladder, which in turn increases pressure on the rental market,’ he added.
Lawrence Hall of online property portal Zoopla also questioned whether 200,000 was enough. ‘While 200,000 starter homes by 2020 sounds like an impressive figure in isolation, the UK needs this many new homes each year to address the housing supply shortage that has plagued the nation for some time and caused real issues for prospective home buyers,’ he said.
‘Truly turning generation rent into generation buy will be a long and difficult journey, but this announcement represents an encouraging first step,’ he added.
If house building is to be boosted there needs to be more finance for smaller builders, according to Luke Jooste, head of real estate finance at Funding Circle. ‘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,’ he said.
‘Large developers can only meet 50 to 60% 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,’ he added.
