On 25 November 2015, Chancellor George Osborne set out the Government’s plans for spending for the next four years, with many areas facing cut backs in the drive to eliminate the deficit. However, housing was one of the big tickets items to benefit, with the housing budget doubling to £2.3bn. In an effort to reverse the housing crisis, much of this will be handed to developers to build starter homes for first-time buyers, helping to turn “generation rent into generation buy”, according to Osborne.
Shared ownership schemes have also been bolstered to the tune of £4bn to help provide up to 135,000 properties for households on lower incomes. The focus on affordable housing is set to produce, “the biggest house building programme by a government since the 1970s,” according to Osborne.
As well as extending the Help To Buy equity loan scheme to 2021, Osborne also announced a new London Help To Buy scheme, to launch in 2016, which will allow new London buyers earning less than £90,000 to get an equity loan of 40% of the property value to help them onto the housing market.
First time buyers under 40 are also set to get a further benefit on discounts of 20% on homes where the discounted price is less than £250,000 outside London and £450,000 in London.
All of these measures should work together to make the dream of home ownership a possibility for a raft of first time buyers that have previously been excluded from the housing market. Consequently, this demand should also trigger a boom in housing supply, with a new era of house building coming on line.
One area to be penalised is the second home and buy-to-let market, which, from 1 April 2016, will see purchasers facing an additional 3% in stamp duty. While this measure has been included to promote home ownership, it has drawn criticism in that it may well end up constricting the rental market, resulting in increased rents.
Credit: Lee Davy, https://creativecommons.org
It’s clear the Government is serious about housing, and the recent Spending Review should pave the way for a building boom that will start to redress the woeful housing supply situation.
But while it’s handing the finances to the developers to bring on home ownership, I’m interested in finding out exactly which developers will hold the reins. We need greater variety in our houses and more small- and medium-size building companies to return to the market. We must see a greater custom build offering to help create diversity and build in longevity with regards to how long people stay in their homes, as opposed to them viewing a first time home as a box to move on from as quickly as possible. Custom build can help deliver this.