Handing Buyers a Lifeline
A Nation of Homeowners
The Chancellor sets his sights on housing.
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George Osborne certainly focused on housing in the Autumn Statement with a five point plan to address issues in the market. Two of the five are aimed at the supply and delivery of 400,000 new homes by 2020 and the other three are largely focused on promoting home ownership.
Supply of New Homes
The Chancellor’s 400,000 target for new homes works out at about 80,000 per year – a lot less than the 200,000 per year that is needed, but it is nonetheless welcome. He hopes to deliver more than half of these into the owner occupied sector with 200,000 Starter Homes and 135,000 Help to Buy: Shared Ownership homes. Starter homes are sold to young first-time buyers at a 20 per cent discount compared to market value. The shared ownership homes will be open to all households earning less than £80,000 outside London and £90,000 in London. But the tenure should be more accessible as the chancellor will relax additional restrictions local authorities can currently impose.
While the government is clearly more disposed towards private home ownership, it does recognise the need for a rental sector so it hopes to deliver 10,000 homes built to rent and at least a further 8,000 specialist homes for older people and people with disabilities.
Provision of Land and Planning
Recognition that part of the issue with supply relates to the availability (and cost) of land, the chancellor set out several measures to accelerate delivery of housing. Part of this is by reforming planning to ensure the number of homes set out in Local Plans are actually provided. And by offering some to smaller house builders there is the potential to get smaller sites and infill plots developed more efficiently.
The rest of the reforms aimed at housing supply are around releasing more land. The chancellor estimates that 160,000 homes can be developed from the release of public sector land, unused land and previously undeveloped commercial, retail, and industrial land to help achieve that 200,000 target for Starter Homes.
Making the most of the land that we do have is also on the agenda for delivery of homes. The Chancellor announced support for the regeneration of brownfield sites within the green belt, for starter homes only, although this will still be subject to local consultation. On top of this, offering funds to help regenerate large council estates and invest in the infrastructure needed for major housing developments will help to use existing resources more efficiently and could regenerate some previously less attractive areas.
Promoting Home Ownership
Extending the Right to Buy to Housing Association tenants was set out in the Conservatives manifesto and the government see this as an opportunity to boost home ownership for those on lower incomes. Recognising the particular affordability pressures on first-time buyers, the chancellor has extended the Help to Buy: Equity Loan scheme to 2021. As this has had least effect in London, a new more generous Help to Buy London scheme was announced.
Both can be used in conjunction with the new Help to Buy: ISA launching on 1 December. First-time buyers that save in a Help to Buy: ISA will receive a 25 per cent government bonus on top of their own savings, up to a maximum government bonus of £3000, which can be put towards the purchase of their first home.
The most controversial announcement in the statement was to introduce higher rates of Stamp Duty Land Tax (SDLT) on buy to let properties and second homes from 1 April 2016. The government wants to make sure that the changes will not affect institutional investment in the private rental sector so it is consulting on an exemption for corporations and funds owning more than 15 residential properties.
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