I’ve been around for a few decades now in the housing market, and I’m flabbergasted at the cost of bricks and mortar – especially when salaries have failed to match the growth. But what’s more shocking is the comfortable acceptance of this by the public.
Turn to any property page in the capital and you’ll find first time buyers enthusing over their half a million pound flat. For this, they’ve had to pay a hefty chunk of stamp duty, and their mortgage – even when supported by shared or government schemes – will most likely be hefty. And the situation is not much different across the UK. Why aren’t they rioting in the streets rather than signing up to 35 years of debt!
While Help to Buy is enabling a new range of first timers to step up, the one thing they need to carefully weigh up is the relatively new – and hugely toxic – subject of leasehold new homes. And yes, it’s an approach brokered by many of our old friends, the volume builders.
Government is aware of it, and the cynical Del Boy attitude that brought it about. And it’s a growing market, as Experimental statistics released by the Department for Communities and Local Government (DCLG) this month estimated that there were 1.2 million leasehold houses in the private sector.
But there is something insidious about a system set up to wring yet more cash out of home buyers, who are already buying the most expensive homes in generations. It’s big business at its worst, although it does deliver record profits.
Leasehold has its place in the market, especially for flats and apartments, where shared facilities and communal responsibility mean there is a need for a system to charge each home. But even in this market there is widespread abuse, little accountability and limited transparency.
But a minority of large developers are selling new homes on a leasehold basis, giving them the responsibilities, but not the rights of ownership.
And in some cases, these have highly questionable small print written into them. For example, one company holds the right to double its leasehold fee every 10 years on one site.
To compound the problem, some are then able to parcel up these leases and sell them on for profit, something that has shades of the US dealing of subprime mortgages that contributed to the financial crash of 2007.
Ultimately, the costs associated with this can create a risk that can, in the worst case scenario, mean that the homes become unmortgageable. Effectively they are unable to be sold to people who need a mortgage, which is most of us.
Sajid Javid referred to these as “practically feudal practices” and put the large housebuilders on notice, warning that Help to Buy will only be given to homes granted on acceptable terms.
What a polar opposite custom build is to this. Nobody should need persuading of the benefits of housing that has placemaking and the homeowner at its very heart.
Custom homes come with community in-built, together with the sense of getting the perfect home for your family’s needs. It offers so much more than the red brick estates that typify the worst of our housing over the last few decades.
And yet, we’re still only seeing a trickle of projects being brought on, and these are proving tricky to market to the consumer who would otherwise purchase from the big builder.
So what can be done? For me, it’s all about collaboration, working together from councils to developers – across regions – to share their experiences, and failings. Collaboration offers a short cut to growth, as we recreate the successes and avoid the failures of others.
Custom build is very much on a journey, and disrupting a mainstream system is slow and painful – but is so worth it. As the White Paper summed up with its name, Fixing Our Broken Housing Market, it’s vital that we bring about change if we’re not to have the coming generation getting mortgages that they pass on to their children. Or alternatively a housing bubble burst that has far wider ramifications beyond housing.
Having a home is a fundamental human right, and not a luxury. And the custom build sector can deliver something better to the market, that offers so much more to the homeowner.