Housing and Planning Bill

The government have proposed a new initiative aimed to ease the pressure on the stretched property market and assist first time buyers get their first foot on the property ladder.

The proposal will place a legal duty on Local Councils to provide 200,000 starter homes on all reasonably sized developments, which will be offered to first-time buyers under the age of 40, at a 20% discount on current market prices.

The proposed Bill was debated in parliament this week, with Ministers directing questions at a number of witnesses from a variety of regulatory bodies and housing charities.

Many of the questions posed are political hot potatoes in the property market, and raise issues that many potential first time buyers are keen to know the answer to!

Question

In the case of the new start home developments, Matthew Perrycock, Labour MP for Greenwich and Woolwich questioned whether new starter home developments will widen the pool of potential buyers.

Answer

Brian Berry, Federation of Master Builders, believes it will. He said ‘We know that 86% of people in this country aspire to owning their own home. We feel that this is another leg up for people, when prices are moving year on year.’

Urban.co.uk’s view

Here at Urban.co.uk, we see starter homes flying off the shelves. No sooner do they go live, than the viewings flood in. Whilst there has been a definite slow-down in movement of ‘big-ticket’ properties, and we foresee investment purchases becoming less frequent in 2016 with the changes to buy-to-let mortgages, first time buyers are always going to want starter homes! When it comes to property, our homes are very much our castles, and as a rule, we as a nation are determined to do whatever it takes to have something to call our own.’

Question

Helen Hayes, Labour MP for Dulwich and West Norwood questioned who would benefit from starter homes.

Answer

Campbell Robb, Chief executive of Shelter revealed that analysis by the charity has shown that 60% of the country, even that on ‘middle incomes’ would be outpriced. It is expected that people in a ‘high-end income bracket’ will have access to the properties. There is a concern that there will still be a lack of genuinely affordable properties.

Urban.co.uk’s view

With figures released this week by the Office of National Statistics revealing that the average monthly salary in the UK comes in at just over £1800 a month, and the average rent costs £751 a month (£960 in London), it is no surprise that Campbell Robb is concerned that only those on a higher than average income would be able to afford to get on the ladder. Even a reasonably priced starter home has deposits, fees, and additional costs to consider, so a potential buyer on a ‘middle income’ who is trying to buy a property whilst currently renting would face an uphill battle. The new starter homes being priced at 20% less than market value represents a significant saving, and could be the boost many people need.

Question

Affordability was the hot topic for Chris Philp, Conservative MP for Croydon South. He was keen to know if the panel agreed that the Bill aims to increase supply of affordable properties, but questioned whether this would have the desired effect of lowering the prices of both renting and buying?

Answer

Jon Sparkes, Chief Executive of Crisis agreed that more properties on the market would indeed drive the overall price of rents and purchases down, but only if the properties are sold and let at the correct price in the first instance.’

Urban.co.uk’s view

With very little property available on the market at the moment, there is a severe case of demand outstripping supply - resulting in a build-up of buyers fighting hard for very few properties, forcing the overall price up, and out of the range of many first-time buyers. Should more new properties become available, buyers will have more choice, and with less people fighting for the same property.

However, with the interest rate set to remain at 0.5% throughout 2016, and the Bank of England pledging that rises will be small and graduated when they happen, it is an attractive time for first time buyers to take the plunge, so there is the danger that as quickly as houses are built, new mortgages will be approved, and the market will find itself flooded with new, eager house-hunters desperate to get their foot on the first rung of the ladder.

The key for serious buyers will be to make sure that they have their deposit ready, where possible have a mortgage in principle ready, and be prepared to move fast- the market is not hanging around and the more attractive the buyers position, the better!

The proposed changes are set to affect a huge section of the population, many of whom are working hard to get their first foot on the property ladder. Our ‘Rent vs Buy’ survey is asking tenants across the UK how they feel about the property market, and asking for honest feedback on whether they think they will ever get their first step on the ladder.

If you’re currently renting, but would like to make the move to become a homeowner, let us know your thoughts by taking the survey here.