Cameron to woo voters with 200,000 discounted homes
Tories to double size of already announced scheme but party chairman fails to explain how price cut would be funded
David Cameron will announce on Monday he wants 200,000 cut-price starter homes to be built for young first-time buyers in a scheme branded by some industry insiders as “RyanAir housing”.
The homes will be funded by lifting obligations on house builders to also provide affordable homes or build new infrastructure, such as roads or health services.
Cameron’s target doubles his plan announced last year to build 100,000 starter homes and comes as Ed Miliband prepares to re-emphasise a rival Labour plan to get young people on to the housing ladder.
The starter homes would be sold at a discount of 20% and the purchasers would not be allowed to sell them at full market value for at least five years, although they may be entitled to rent them out. They would largely be built on brownfield sites, previously used for industrial or commercial purposes and not already earmarked for housing.
Housing professionals have challenged the first version of the scheme, dismissing them as RyanAir housing that will reduce still further the already depleted number of social homes in England.
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.
The Conservative plans spell out that housebuilders can afford to sell the homes at 20% below the market price because they will be exempt from community infrastructure levy, used to pay for services such as roads and sewers, and from section 106 obligations, which require social housing to be included in building schemes or a payment in lieu. They will also be exempt from the zero carbon standard, designed to ensure they emit no carbon. They will only be available to households aged under 40, the age group most locked out of home ownership.
The former housing minister and current Conservative chairman, Grant Shapps, appearing on Sky News’ Murnaghan programme, was, however, unable or unwilling to explain how housebuilders could afford to offer homes at 20% below the market prices or how the shortfall could be financed.
The government is proposing to set up a new Design Council to encourage and promote good design among starter homes, but it will have no powers to enforce the very highest standards.
Labour has warned that the planned homes may be stuck on the edge of town, remote from bus services and schools, and tagged on to business parks or industrial estates.
A 20% discount will save the average first-time buyer £43,000 on a £218,000 home (the average cost paid by a first-time buyer), which would leave a revenue shortfall of £8bn from income if current regulatory obligations had been retained on the 200,000 homes.
Miliband will counter by emphasising his plan to build 200,000 homes a year by the end of the next parliament. He promises to legislate for three-year tenancies, during which time a ceiling on rent increases would be imposed, saving the typical tenant £625 over the course of the next parliament.
Scepticism about the sincerity of coalition parties to commit seriously to a housebuilding programme has been expressed by the outgoing Liberal Democrat MP Jeremy Browne. Speaking at the Policy Exchange thinktank last week, he said: “Both governing parties travelled on the train from Waterloo down to the Eastleigh byelection in 2012 and argued to the local electorate that they would be the ones that were most effective at stopping any new housebuilding taking place in Eastleigh, and then got on the train and came back to Waterloo and made speeches here in Westminster about why we need more housebuilding.
I said to Nick Boles, who at the time was the planning minister, ‘Have you been down to Eastleigh yet?’ and he said, ‘I’m told I’m not allowed to go down in case it inflames the whole housebuilding issue’.
”The public, whether it’s the NHS or housebuilding, detect that gap, and you will see it now at constituency level with quite debased leaflet-based campaigning about what the parties are going to stop at local level, which is almost completely at odds with the macro-level speeches that the leaders are making up in Westminster.