Earlier this month the Government published it’s much anticipated Housing White paper. This document was tipped to fix the UK’s ‘broken housing market’. In essence it sets out the Government’s plans for housing and development for the coming Parliament and beyond, and what they propose to do to make their plans achievable. Broadly speaking the Government wants to continue to support buyers schemes such as Help to Buy, overhaul aspects of the planning system to speed up planning applications for new homes and ensure that there is a decent supply of affordable rental homes.
So how does the Government propose to achieve this?
The Government has told all Local Authorities in England (Scotland, Wales and Northern Ireland are responsible for setting their own policies) to devise a plan for housing in their respective areas by 2018, by researching and compiling information on the type, location and quantity of housing required in their area. Local Authorities would then be expected to adhere closely to their plan; not unreasonably withholding consent for schemes that would serve to help them meet this plan. They also wish to cut the length of time Local Authorities have to deliberate and decide on such planning applications from three to two years.
Currently 60% of new homes in the UK are built by the Nation’s ten biggest house builders. The Government want to encourage smaller firms to build more properties, and encourage the use of more modern and non traditional forms of construction; going back to high rise properties and developing areas close to transport and commuter links. This would require some changes in mortgage lenders policies which may not currently accommodate these forms of construction, but it is anticipated that the Government will apply pressure to make them do this.
They will seek to increase the supply of land by releasing publicly owned Brownfield sites for redevelopment. Furthermore they want to prevent larger firms from ‘land banking’; taking option agreements or purchasing land and holding it for protracted periods or until such time as land and property prices have increased. They will also look to reinstate housing targets which were previously abandoned.
So what does this mean for you?
There was no specific mention of those wishing to downsize in the White Paper. It has been suggested though that with an aging population combined with a lack of suitable properties for downsizers to move to, means that at present a great many existing family homes are ‘tied up’ with long term owners; more mature couples living in a four bedroom family homes for example. It seems logical that more properties suitable for downsizers need to be made available and perhaps additional incentives provided to these people.
First Time Buyers
The Government reiterated it’s commitment to providing assistance to first time buyers by continuing with schemes such as the Help to Buy ISA, Help to Buy, Shared Ownership and Rent to Buy. They also revealed some detail relating to ‘Starter Homes’ for the first time; homes which would have to be bought by buyers with a mortgage to exclude investment buyers. They would be sold at a 20% discounted rate; which would be repaid by the owner over a fifteen year period. If the property was sold on during this period some, or all, of the discount will have been repaid. It is expected that there may be some additional assistance provided to First Time Buyers in the forthcoming Budget.
Landlords have taken a ‘hammering’ in recent years; changes in the Stamp Duty Land Tax they pay and upcoming changes to the tax relief available to them mean that their yields have suffered as a result. These have been compensated at least in part though by strong demand, high rents and cheap buy to let mortgage rates. It looks likely that additional ‘red tape’ may be implemented though; further increasing costs to Landlords, and reducing the flexibility on tenancies by increasing the length of tenure beyond the traditional six or twelve month assured short hold tenancy (AST).
Those who are Renting
The number of people in private rented accommodation has doubled in the last decade; with over four million households now being privately rented. Affordability is by far the biggest issue facing tenants; with the majority of those in rented accommodation paying approximately half of their income to their Landlord each month. This is not just likely to be more than they would be paying on a mortgage if they owned the equivalent property, but often prevents them from being able to save a deposit to buy their own home. An increase in the housing stock would help with affordability, and the Government also looks set to bring forward the scrapping of tenants fees from letting agents in the Budget.
So if you are considering making a purchase, due to remortgage or just considering your options in the coming months, and would like to understand what the recent Housing White Paper could mean for you, One 77 Mortgages can help. Regardless of your present position we provide fee free mortgage and protection advice to our customers from around the UK. We deal in all forms and sizes of residential mortgages, and can also deal in other forms of property finance including auction finance, bridging finance and commercial mortgages.