Blueprint or Whitewash?

The long awaited housing white paper “Fixing our Broken Housing Market” has been published. Does it tell us anything new about the Government’s plans for the housing market?

It acknowledges the issue of high housing costs where 2.2 million households spend a third or more of their disposable income on housing and states the truism that there is a need for the right houses in the right places. It re-states that we need to build around 250,000 houses a year, that’s a million by 2020, on the basis that building more houses will slow the rise in housing costs and it will bring down the cost of renting.

For large housebuilders it contains the threat that local authorities will take action if they are seen to be “land banking” – holding back land from development until the time best suits that developer to proceed: an allegation vehemently denied with large housebuilders stating numerous other reasons for land not coming forward for development – planning conditions, lack of skilled workers. “Tardy” planning departments might find themselves in the spotlight and at risk of censure but, in practical terms, what can be done if cuts have reduced staffing numbers?

Notwithstanding the stated commitment to back small and medium-sized builders, no doubt it will be to the large housebuilders that the Government will turn to deliver the majority of the newbuild Starter Homes to be sold at under market value that are referenced in the white
paper. Clearly, there will be eligibility criteria to meet: most likely to be based on income and there are proposals that the “discount” would need to be repaid when the property is sold.

What would happen if the property were rented out? There is talk of the requirement to repay the discount lasting for a 15 year period; compare that with the 5 year period that applies under the Right to Buy Scheme. Does the Government not see that personal circumstances are likely to change in a 15 year period: how many home owners will need to move because of work commitments? How many couples will separate – would each of them be eligible for another “starter” home?

On a separate note, what obligations are to be imposed on occupiers of Build to Rent homes, another new initiative that is going to be dependent on large scale investors such as pension funds providing the capital? There’s an ongoing consultation about that. Back in the Autumn we commented on the proposal that will allow Housing Association’s tenants to exercise the Right to Buy and this has been piloted so more on this in the near future.

What of the investment market? There is very little to cheer the private landlord with no mention of reinstating mortgage relief or reducing the higher rate of Stamp Duty Land Tax. For tenants, there is a repeat of the pledge to set up a database of “rogue” landlords which was aired last year and which is likely to enable local authorities to issue fines as well as to prosecute. This has been subject of a recent consultation. Also, there may be the imposition of family friendly 3 or more year private rental tenancies on newbuild rental homes to produce greater security for those renting in the private sector, although Shelter, the homelessness charity, continues to campaign for 5 year tenancies.

Whatever changes are planned for the housing market, we, at Dodds Solicitors LLP, are here to help – from Right to Buy, to investments, to buying and selling your own home – please contact our property team on 0116 262 8596.