The long-awaited Housing Strategy was announced this morning by the Prime Minister and Deputy Prime Minister. It’s an important document, and it sets out the coalition’s stall on how we intend to get the housing market – and in particular housebuilding – moving again.
It’s been a long-established view that we have a housing crisis in the UK. Although new starts were almost a third higher in 2010-11 than they were in 2008-09, there were just 103,000 new build housing completions in England last year. Meanwhile the latest household projections suggest that the number of households will grow by 232,000 per year up to 2033. So it couldn’t be more important to give the housebuilding industry a shot in the arm, and do more to ensure that we’re using our existing stock more effectively.
And that’s what today’s strategy offers. There’s action to get the housing market going again, with a New Build Indemnity Scheme, led by the Home Builders Federation and Council of Mortgage Lenders, to provide up to 95% loan to value mortgages for new build properties. This will give a helping hand to 90,000 prospective buyers currently frozen out of the housing market because of the need for large deposits. There’s also a new £400m fund to get Britain building, designed to support building firms in need of development finance, including small and medium-sized builders. Its aim is to help to unlock progress on stalled sites which have planning permission and are otherwise shovel ready.
We’re also freeing up public sector land with capacity to deliver up to 100,000 new homes through Build Now, Pay Later deals. This will help to support builders who are struggling to get finance up front.
And there are a number of items that will be of interest to Lib Dems in particular. There’s the £500m Growing Places Fund, first announced by Danny Alexander at our Conference in September, to help support infrastructure that unblocks housing and economic growth.
We’re also following through on our commitment to tackle the national scandal of 700,000 empty homes. I was able to announce more details of the £100m Empty Homes Fund, which will give councils and communities access to funds to bring empty homes back into use as affordable housing. Beyond that, we’re providing an extra £50m to tackle some of the worst concentrations of empty homes in the country. We are seeking to secure match funding from local partners to bump up the total amount to £100m, which will be a particular help in some of the “ghost” neighbourhoods in our northern cities – the legacy of Labour’s failed regeneration projects. There’s also our changes to council tax, giving councils control over the discounts they set on empty homes (and second homes for that matter), as well as our consultation on giving councils the flexibility to introduce an Empty Homes Premium – worth up to 50% of council tax – on any property left empty for more than two years.
We are encouraging more social and affordable housing by supporting greater innovation by social landlords, and delivering 170,000 new affordable homes by 2015 – making the Coalition the first government for 30 years to increase the supply of social housing, and providing 80,000 jobs into the bargain. And so far as the Right to Buy is concerned, there is a clear Coalition agreement to build one additional affordable home for rent for every home sold – so no loss of social housing for rent.
There’s some key points made about quality – both of design and of construction. We’re supporting green housing in a number of different ways. We’re introducing the Green Deal from next October, providing incentives for landlords and householders to improve the energy efficiency of their properties at no upfront cost, and helping people to save money and stay warm as they go green. We are funding the Design Council to support communities in shaping development in their area, improving the energy efficiency of both new and existing homes. And we’ve reaffirmed our commitment to delivering the Zero Carbon Homes standard for all new homes from 2016, with the next upgrade in the Building Regulations in 2013 taking us halfway there.
We know we won’t achieve our aims by attempting to control the market from Whitehall. The system of setting top down targets for housing and vast amounts of planning guidance did not deliver the homes we need nor the places that people want to live in. But this strategy will support and empower councils, communities and housebuilders to deliver the growth and the homes that we need, whilst crucially, also delivering them to the quality we need.
Andrew Stunell is the Lib Dem Communities Minister and MP for Hazel Grove
You can read Laying the Foundations: A Housing Strategy for England at the Department for Communities and Local Government website.
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25 Comments
So you want to use taxpayer money to give 95% mortgages to people who otherwise would be refused a loan by banks?
It’s almost as if the sub-prime mortgage crisis in the US,A which precipitated the global reccession and required the UK taxpayer to fork out billions to prevent RBS and Northern Rock from collapsing, didn’t happen.
This policy is insane.
There is a lot of very good stuff in those proposals. One part, however, is not just bad but very bad.
Britain’s housing stock is grossly over-valued. The basis of the overvaluation is the over-valuation of housing land. Pumping extra money into the housing market at present values will only inflate the market at present prices and put off, for a while, an inevitable slow downward drift in housing value, which is the worst possible thing for the economy generally, so dependent are we on private housing. What is needed is for housing values to take a big ‘hit’ followed by a slow revaluation/inflation from a sensible price level. Not at all popular with those facing negative equity but you can actually do things to ‘bridge’ people in negative equity.Putting false value into housing is (almost) the root of all economic evil.
@ tony
while I agree with a lot of your post, how does increasing the supply if housing and housing land cause its value to rise? surely this will cause its vsalue to fall, that would be standard when supply rises?
David, I am not talking of the land supply issues, I am talking about the money-pumping ones (95 per cent loans on dubiously-based ‘value’).
Why does every Government think the way to solve housing problems is to flog off social housing on the cheap!
I am not confident that the one sold one built will come true when the sale proceeds received are less than the house is worth.
The other big problem is house prices are too high, it can’t go on like this for ever, the housing bubble will burst at some point. Which is why in my opinion mortgage lenders are demanding high deposits so if prices drop then their clients wont be in negative equity.
Andrew, why is the Indemnity Scheme restricted to new build? No doubt when you bought your first home it was somewhere that needed a bit of work, a bit of improvement. Now first time buyers are encouraged to buy a new house with fitted carpets, fully fitted and equiped kitchens, on a green field estate, and to shun that empty house that the first time buyer could bring back into use, modernise with much of their own love and labour, and so extend its life … recycling the place.
Encouraging building societies to lend on such a property and bridging the gap in its value until renovated would make so much more sense, socially, economically and psychologically.
B
As Tony Dawson says.
With a shortage of property any help the government gives will flow straight through to prices. The government may think it’s helping would-be buyers but actually it’s helping sellers. Exactly this effect was seen in Australia when the govt there intoduced a “buyers” scheme a few years ago.
Also we are entitled to ask how it is that despite having one of the world’s top financial centres in London the City is not able to fund such banking basics as housing. And if they can’t do that why do they deserve the elevated position and pay they enjoy?
The economic supply of owner-occupier property has precious little to do with the number of new-builds; it has much more to do with fiscal and monetary policies. In the bubble, prices rose as a result of loose lending (increased demand in the form of credit) and the bust was a result of reduced demand (reduced lending). The BoE then prevented prices falling further by slashing based rates, thus decreasing supply and increasing demand. The largest component of supply is the existing housing stock and is a function of sellers’ willingness and ability to sell. The best way, therefore, to help first-time buyers is to increase supply by putting base rates up – this would force prices to fall faster than the present rate, thus enabling first-time buyers to out-compete buy-to-letters whose yields would take a massive hit from the increased cost of servicing their mortgages. If it’s not possible to raise rates because of the fragile economy then it is imperative that taxes need to be raised on buy-to-let, otherwise the misallocation of capital will just continue as it has done since the BoE slashed rates.
The worst possible thing to do for first-time buyers and taxpayers is the present plan to underwrite bad mortgage lending (95% LTV mortgages). This is morally bankrupt and will only further bail out the banks, land-owners and speculators responsible for creating the mess in the first place. It will artificially prop up house prices for a while longer and will get first-time buyers into more debt than their houses are worth and will leave the taxpayer with the burden of making good the losses, whilst the bankers keep smiling at their ill-gotten gains. I seriously cannot believe I’m reading this on a Lib Dem page – is this party really related to the party of Lloyd George and the Georgist Land Value Taxers?
This plan is the most idiotic action of any government I can ever remember in the UK – even more idiotic than the negotiation of the GPs’ contract in 2004. Go and look at the reactions of telegraph, guardian and BBC readers in the respective comments sections to see how united those on the left and those on the right are in condemntation of this insanity. I’ve never seen such agreement between those on the left and right of the political spectrum. Left vs right doesn’t matter any more – this is a battle between intelligent people and brainless government that is further bailing out the bankers and landowners at the expense of those that work and pay for things.
@Liberal Eye
Got in first! All the evidence when this was introduced in Australia was that it fed inflation at the lower end of the house market – this idea of helping buyers is is just chucking money taxpayers money away on the holy grail of house ownership. Whatever happened to good evidence based policy?
The Daily Mash sums it up very well:
“If it’s broke fix it with the thing that broke it” The new rallying cry of the coalition.
http://www.thedailymash.co.uk/news/society/housing-market-is-pretty-much-all-we-have-left%2c-admits-cameron-201111214570/
What Tony Dawson says.
This announcement amounts to more subsidies for landowners / developers dressed up as help for FTBs. Toegther with the ’empty homes’ handouts, it will have precisely the opposite effect on housing affordability – keeping rents and prices high, so transfering further public money and socially created wealth from poor to rich.
We can’t afford to start another property bubble. TAX empty homes and developer land banks into use now!
This is the type of legislation that results from allowing party donors to draft policy.
It is great for the mass market house builders. They own lots of land already but they overpaid for it so need access to cheaper land or house prices to be propped up by government intervention. So the government come along and force council’s to sell tax payer owned land and below open market value to builders who then are get to build on it and only have to pay when the sell the house they build on it. The tax payer loses out in many ways, land they already owned is sold off below what it is worth, they then guarantee the mortgage of someone who wouldn’t normally get one and finally they bear all the business risk the builders should be bearing.
The alternative would be for prices to adjust to a level where they are affordable and for the big housebuilders to go bust and their massive portfolios of sites to be released onto the open market and developed by individuals, co-operatives etc.
Then again individuals and co-operatives don’t tend to offer directorships to MPs on retirement.
I agree with Timak, this does seem to be a policy written by the big housebuilders for the big housebuilders. This would bother me less if they didn’t already behave like OPEC in the 70s sitting on a huge landbank and holding the wider economy to ransom. We need more building and these guys have decided its in their best interests to choke off supply. Reform the planning system, free up the supply of land and let these big money interests take a hit on the land they have been hoarding. At the end of the day, we won’t end up with everywhere concreted over because even concrete costs money.
A wasted effort in many ways….Selling off social housing reduces, not increases, the stock. Thatcher’s sell-offs resulted in negative equity at the first serious hurdle. How can it make sense to force a council to sell a house at a fraction of its value and then expect that money to fund a ‘new house build’?
Were all the efforts put in to create houses at ‘affordable’ prices its intentions would be laudable. However, a look at any property website shows a glut of ‘for sales’; creating more ‘unaffordable’ homes doesn’t make sense and allowing 95% morgages (backed with taxpayers’ money) merely fuels, as others here have said, the ‘bubble’.
Please Mr Stunnell, STOP calling homes that charge 80% of market rents ‘affordable’. It is a sick joke to do so in most of southern england – where, it happens, the housing crisis is. And please don’t imply that selling off council homes and replacing them with higher priced housing association homes is replacing liek for like – it is an orwellian abuse of English and decit of the most dishonourable kind.
Speaking of misuse of the English langauge, it should be noted that a ‘strategy’ is a master plan that identifies a problem and uses a variety of tactics to achieve a defined objective. Sadly yesterday’s document is a rag bag of mostly already announced measures that barely begin to nibble the toes of the problem. A strategy it is not, Mr Stunell.
You and the Tories now finally seem to recognise that building desperately needed new homes is good for economy and for society, so will you now actually commit to building enough GENUINELY AFFORDABLE homes in the areas where they are needed?
Documents like yesterday’s make me sorry i ever campaigned so long for the party to get into power.
There is much behind the headline grabbing statements that should worry Liberal democrats.
Did you notice that in future social rents are to increase in line with RPI? While benfits and pensions rise at the lower (usually) CPI?
Did you notice that “for-profit” organisations are to be allowed to run our social housing (on the grounds that they are “more efficient”). So we Council Tax payers are going to pay for the dividends and bonuses of big business.
As previously stated, selling off council housing is not going to increase the stock, as it is unlikely that extra affordable units will be built over and above those already planned. Letting developers “renegotiate” section 106 agreements will result in fewer affordable houses being built. For example, Sherford new town outside Plymouth was originally intended to provide 40% affordable. The latest proposal is just over 12% and much less public infrastructure.
Support for Community Land Trusts is to be welcomed in small rural areas, but it is a minefield for non professionals to understand. Hopefully the “right to buy” will not be extended to CLT tenants as well?
Finally, the help for 10,000 first time buyers will no doubt be welcomed by them, but what of the many more who don’t get the help? In Bristol when help was given to “key workers” and applied just to new build, the price for a one bed flat ended up greater than a two bed house in the “used” market. Sales in the “used” sector normally run at 5 times the number of sales in the “new” sector. THese policies are just to help the big builders shift their stock!
I agree with so much of what has already been written and I hope Andrew Stunnell actually reads this feedback. More importantly I hope Nick Clegg reads it and realises that a reshuffle is OVERDUE in this department where we have been royally shafted by Pickles and my favourite MP (cos he’s mine!) Grant Shapps, and their rich donors.
Selling off stock cheap – who does that benefit? Not the people who really need help.
Encouraging people to borrow beyond their means? How did we get in this mess in the first place? You couldn’t make it up.
Worst of all – selling it as something we agree with, when we clearly have totally different objectives.
Sorry Andrew but this is not good enough.
I agree with many of the comments already made. The headline initiatives in this strategy statement are positively harmful (although it does contain some more positive initiatives). We might have to stomach this as the sort of thing you’re going to get from the Tories. But we don’t have to endorse it as a great idea.
I’ve put a lengthier response to the housing strategy here:
http://www.alexsarchives.org/?p=2428
This daft plan was discussed on Newsnight last night and ran into a blizzard of heavyweight criticism. And, in the “you couldn’t make it up” department,it was stated and not contradicted that it was written by big developers. (Starts at 19:00 minutes in)
http://www.bbc.co.uk/programmes/b006mk25
As for the politics, they really stink. It’s one thing to do something with the nose firmly held when you genuinely believe the unpleasant medicine is necessary but to do it merely to bail out developers who will otherwise report a loss on their landbanks and banks who have overlent is just offensive. This is crony capitalism at its worst.
That hardly-noted radical Simon Jenkins is attacking part of the policy today in the Guardian. Except ConservativeHome calls him ‘Simon Hughes’. 🙂
http://www.guardian.co.uk/commentisfree/2011/nov/22/cameron-sub-prime-homes-kick-start
Ref the Simon Jenkins article I was particularly struck by one comment……………”o get development moving again, all the government needed to do was to announce that as from 6 April 2013, sites with planning consent would be subject to the same Council Tax as if the development had been constructed”…..
Radical, or what?
”to get development moving again, all the government needed to do was to announce that as from 6 April 2013, sites with planning consent would be subject to the same Council Tax as if the development had been constructed”
Sounds like an excellent idea. Given that the tax wouldn’t be paying for council services and the tax wouldn’t be levied on improved property (given no buildings would have been built) why not call it something like ‘Land Value Tax’?
Now, Now, Steve you mustn’t use those three words….You’ll be accused of being a ‘Labour Mole’.
Mind you Vince Cable and Chris Huhne used to be in favour; perhaps Andrew Stunell might have asked their feelings before praising this mishmash. or, perhaps they too, have had a change of heart.
It’s not what you say it’s what you do. Housing stats from HCA:
http://www.homesandcommunities.co.uk/sites/default/files/aboutus/official-statistics-release-tables-221111.pdf
Total affordable rent properties started in entire South West region in six months to 30 September?
17
Only 259 in whole of England.
IN the two years to April there were over 75,000 starts (that was Labour’s plan).
Stunnell should hang his head in shame.
Can I please ask Andrew Stunell having made the decision(whatever you own viewpoint on the merits of such a decision) to abolish Social Housing Tenancies for Life why did we not abolish the Assured Short Hold Tenancy (AST) as the standard tenancy agreement for Private Tenancy Lettings at the same time? With Homeless functions also being allowed to be discharged with the use of Private Tenancies there is now no longer no justification for retaining AST’s as the standard type of tenancy agreement. If Private Landlords genuinely want to be involved in the Lettings market they should offer similar fixed term Assured Tenancies to RSL’s. By agreeing to do this we can at last start to see improvements in the quality of Private Lettings and in particular address the issue of disrepair in this sector.