Will the PM’s plans work?
If you’re a first-time buyer, here’s why you might want to vote for the Tories.
Prime Minister David Cameron has promised facilitating a 20% discount on over 200,000 “decent, well-built homes with gardens” to under-40s.
Under the scheme, the government will let developers build new homes on brownfield sites at a cheaper price. In turn, developers will have to sell homes at 80% of the market value.
The cost of building a home on a brownfield site will lessen as the government will waive off fees homebuilders pay local authorities for dwelling on brownfield sites. According to BBC, builders need to pay at least £45,000 per dwelling on brownfield sites.
The discount will be available on homes priced at £450,000 in London and £250,000 outside London. However, if buyers sell their homes within five years, they would have to repay the 20% advantage.
Here’s the government’s explanation on how the scheme will work:
Innovative planning changes – to bring new homes onto the market at a minimum 20% discount
At the heart of the Starter Homes initiative is a change to the planning system. This will allow house builders to develop under-used or unviable brownfield land and free them from planning costs and levies. In return, they will be able to offer homes at a minimum 20% discount exclusively to first time buyers, under the age of forty. Currently, builders can face an average bill of £15,000 per home in Section 106 affordable housing contributions and tariffs, often adding tens of thousands to the cost of a site. Under the proposals, developers offering Starter Homes would be exempt from those Section 106 charges and Community Infrastructure Levy charges. The homes could then not be re-sold at market value for a fixed period – making sure that the savings are passed onto homebuyers.
In a speech in Essex, Cameron is set to promise that the homes will be no “rabbit hutches or shoe boxes”.
Cameron will say: “Young people are getting a job, working for years, saving away but still unable to buy – stuck living with their parents, sometimes into their 30s.
“We want to build a country that rewards those who work hard and do the right thing.
“So we have already announced a major new policy for the next Parliament.
“We have said that the government would build 100,000 new Starter Homes. They’ll be 20% cheaper than normal and they won’t be snapped up by buy-to-let landlords they’ll be reserved for first-time buyers under the age of 40.
“Already the feedback is good. Some of the UK’s biggest property developers have signed up – including Barratt and Taylor Wimpey and just this weekend we officially launched the website for buyers to register interest.
“We’ve shown what we expect Starter Homes to look like not rabbit hutches or shoe boxes, but decent, well-built, homes with gardens – places to start and raise a family.”
Will Cameron’s plans work? Here’s what housing professionals have to say
The Chartered Institute of Housing warned: “The need to deliver discounts for purchasers may encourage developments which are high density and/or low spec, and which may not remain attractive places to live in the long term.
”It may be very difficult to identify sufficient land of this type to build the number of homes envisaged, as many brownfield sites which are not already optioned for development require expensive work to make them suitable.”
Shadow housing minister Emma Reynolds didn’t have much faith in Cameron’s plans either.
She said: “Warm words from David Cameron about home ownership will ring hollow for those young people and families who have been priced out of home ownership over the past five years.
“This government has presided over the lowest levels of house building in peacetime since the 1920s and home ownership is at its lowest level for 30 years.
“There is also a record number of young people living at home with their parents in to their twenties and thirties.
“Labour will get at least 200,000 homes built a year by 2020, including badly needed affordable homes, and we will give first-time buyers first call on homes built in local areas of housing growth.
“We are in favour of building starter homes but it is not clear how the government is going to deliver these homes 20 per cent cheaper than market price.”