The Government Housing Strategy published on 21 October certainly has something for everyone: homeowners, renters, older people and environmentalists. But can the strategy really be all things to all people?
Unsurprisingly, the strategy contains a number of initiatives aimed at helping first time buyers. The centrepiece is the New Build Indemnity Scheme which aims to increase house building and help those without a large deposit to buy a new house. It is not limited to first time buyers, but will likely be of most help to this group.
The scheme will work by home buyers paying a minimum 5% deposit on their new home, the homebuilder contributing 3.5% of the purchase price to an indemnity fund and the Government chipping in a further amount, likely to be 5.5%. If, in the future, the lender has to repossess the property and makes a loss, they will have the three layers of funds to mitigate losses. There is still a raft of issues to work out before the scheme can begin in spring 2012, most importantly whether the mortgage can qualify for capital relief, and to this end the BSA will be sitting on a working group to tackle the detail of the scheme.
Elsewhere in the housing strategy, the theme of building new homes continues with a £500 million Growing Places Fund, the release of public sector land for building, a £400 million Get Britain Building investment fund, a simplified planning system and support for self builders.
Moving away from the owner-occupied sector, there were a couple of interesting points on social housing and the private rented sector. Continuing the theme of increasing home ownership, the Government will be reinvigorating Right to Buy though increasing the discount offered to those wishing to buy their council house.
We are assured that the properties will be replaced on a one for one basis, but with a possible 50% discount being offered on purchase price might this mean one three bedroom home will be replaced by one studio apartment?
In the private rented sector, the Government re-state their position of no additional regulation so those who were hoping for the implementation of the recommendation in the Rugg Review - that landlords should be licensed - will be disappointed. The strategy does suggest that there should be increased institutional investment in the private rented sector – something that may come about as an unintended consequence of the EU Directive making its way through the legislative system. The Directive suggests that buy to let mortgages may become regulated.
The collection of initiatives within the Government’s housing strategy contains lots of positives for the industry and the BSA looks forward to working with Government to bring them to fruition.More Articles by Building Societies Association (BSA) ...