Industry criticises Cameron’s ‘starter homes’ plan

A Tory plan announced yesterday to introduce 200,000 ‘starter homes’ for first-time buyers has been heavily criticised by the property industry.

Warren Lewis
3rd March 2015
Black Houses

The Prime Minister revealed that the new rules will allow housebuilders to slash 20% off the usual price by reducing planning requirements and to passing the savings on to first time buyers below the age of 40.

Andy Frankish, New Homes Director at Mortgage Advice Bureau , had this to say: “Although it is still very much in its infancy, the Starter Home Scheme promises to be another popular option for first-time buyers. However, questions surrounding eligibility remain unanswered: it has not yet been revealed whether there will be additional restrictions on top of the 40 year age cap. Crucially, there has been no mention of maximum loan-to-values (LTVs): for this scheme to be successful or even to compete with Help to Buy, 95% mortgage lending must be available.
 
However, many lenders could be put off from offering this if they are not able to sell at full market value for five years, which is problematic in a repossession scenario. The general lack of lender and broker involvement in the early stages of this scheme could also prevent it from having a flying start: little is known about its mechanics so it may be a while before widespread lender support is obtained. Without a good lender mix, the scheme could quickly lose momentum, and if the sites are all brownfield developments surveyors will need to be certain property will hold value.
 
It is always positive to see that government is committed towards new housing options, but it is also worth remembering only 100,000 first-time buyers will benefit from this scheme: a drop in the ocean compared to the current housing crisis. Although no short-term solutions exist, we need more cohesive cross-party thinking to really make a difference to the shortfall in the number of new homes available on the market.”

Gavin Smart, interim chief executive at the Chartered Institute of Housing, said: “We’re currently building less than half the number of new homes we need – the result is a housing crisis in which millions of people are being priced out of a decent home. So we welcome the focus on supply and affordability that the starter homes scheme represents. But we are very concerned about these sites being exempt from section 106 agreements, which usually require social or affordable homes to be built as part of a development, for people on lower incomes.
 
This smacks of building for one group of people at the expense of another. Social housing is critical if we are going to solve the housing crisis – there are always going to be people who can’t afford to buy and we must provide decent, affordable homes for them too.

If all the focus is on home ownership, we are never going to build mixed communities.
 
We can solve the housing crisis in a generation – but we are going to need a long-term commitment from all of our political parties. We need investment in all tenures (ownership, shared ownership, private and social rent) if we are going to make housing more affordable for all.”

The Federation of Master Builders (FMB) said the Conservative Party plans to deliver 200,000 new homes for first-time buyers is a welcome ambition but needs to be delivered by a range of builders to ensure good quality design and diversity.
 
Brian Berry, chief executive of the FMB said: “The FMB supports the ambition of the Starter Homes policy to improve options and affordability for first time buyers. This is a model which can be made to work, but it will be important to make sure that it is delivered by a wide range of builders operating at different scales and that most of the Starter Homes built are additional to those which would otherwise be delivered.
 
Taken together, announcements on housing set out by the Conservatives over the last few days amount to a welcome set of proposals. The continuation of more relaxed rules on home extensions until 2020 will support extra work for small builders and provide them with greater long term business certainty. What’s more, these proposals are good for home owners as they give them greater freedom to improve their properties with the consent of their neighbours – it should be recognised that by and large these arrangements have worked well.
 
Moves to earmark brownfield sites for the delivery of custom built homes could significantly increase opportunities for small builders, leading to more homes and greater choice. We are pleased to see the Conservative Party taking important steps like these to support smaller builders. We hope that focus will continue and that these policies will draw the support they deserve.”

The National Housing Federation said it is a "short-term initiative that fails to address the root of the problem".
 
David Orr, chief executive of the National Housing Federation, said: “This initiative would come at the expense of investment into properties for affordable and social rent and shared ownership, taking money away from renters and giving it to first-time buyers. We need all developments to contribute to affordable housing supply. We are calling on the next government to come up with a long-term plan to end the housing crisis within a generation, by making homes affordable as well as helping first-time buyers.”
 
Chris Handy, chief executive at the Accord Group, agreed that the focus should be inclusive of everyone “rather than just building 200,000 homes for the young who ‘work hard’?” “Lots of people of all ages work hard and have done so for many years, yet still cannot afford to buy their own home. Many too have to rely on benefits – yet these are being cut, so owning their home will be just a dream.
 
There is a housing crisis due to a huge and growing shortage. The National Housing Federation Homes for Britain campaign backs the need for more homes. We should not be building for one group of people. We need to focus on building more sustainable and affordable homes, in sustainable areas which in turn will create much needed jobs for everyone.
 
There are always going to be people who can’t afford to buy, so we need greater investment in a range of tenures, creating mixed communities and where housing is affordable for all.”

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