The new housing bill

So finally the new Housing and Planning Bill has been introduced to Parliament by the government marking the start of real change to transform the generation rent society we now find ourselves in to a generation buy. The key speech delivered by Brandon Lewis noted:



“As a one nation government we’re determined that anybody who works hard and aspires to own their own home has the opportunity to do so. More than 230,000 households have been helped into homeownership through government-backed schemes since 2010, while our extension to the Right to Buy will see a further 1.3 million housing association tenants given the opportunity to own their own home. And the Housing Bill will allow us go even further by kick-starting a national crusade to get 1 million homes built by 2020. It truly is an historic moment that will help deliver the homes hard-working people rightly deserve, transforming generation rent into generation buy.”



So how will they achieve these grand plans, well it’s as simple as:

• New affordable Starter Homes – a new legal duty will be placed on councils to guarantee the provision of 200,000 Starter Homes on all reasonably sized new development sites; these will be offered to first-time buyers at a 20% discount on market prices. This is desperately needed but in principal not sure it will necessarily solve the problem. Renting has become more common as buying a property has become less affordable. The steep increase in house prices in the early 2000s led to a doubling of the house price to earnings ratio, from around 4 in the 1990s to just under 8 now. Whilst falling mortgage rates have constrained the growth in interest costs, the same is not true for first time buyers’ deposits. First time buyers have been hit by the combined effect of rising house prices and lenders withdrawing higher Loan-to-Value mortgages. This means that average first time buyer deposits have increased almost five-fold since the late 1990s, from £10,000 to almost £50,000. And the key above 20% discount on market prices, the same market prices that are currently overinflated.
• Automatic planning permission in principle on brownfield sites – to bring forward more land to build new homes quicker, while protecting the green belt. Yes a great idea as it has long been acknowledged that house building in the UK is insufficient to satisfy demand. The last 5 years have seen an intensification of this shortfall as average numbers of completions have fallen markedly. There has also been a significant change in the make-up of new housebuilding, which has contributed to the tenure trends. Social housing completions have fallen from 47% of the market in the 1970s to only around 20% on average since 1980. The general decline in the number of homes being built also means that the absolute number of social homes being constructed is historically low.
• A favorite of mine as a big supporter of SME housebuilders is planning reforms to support small builders. By getting councils to allocate land to help up to 20,000 custom and self-built homes a year can be built by 2020
• There is also Local Plans and Pay to Stay.

Off the back of the Housing Bill though developers could benefit massively from the PDR, which was due to expire in May 2016, for office-to-residential conversions permanent and also include the demolition of offices. So is it a good thing to allow offices to be converted to residential schemes without planning permission? Well it certainly creates flexibility that might bring some schemes forward rather than allowing them to sit idle waiting for the finances to stack up.

Feel free to contact me 0113 288 2276 or lee.a.wilkinson@uk.pwc.com if you wish to discuss this blog or anything relevant to property and construction.

 

Enjoy the weekend

Lee