UK Housing Minister hints at rethink on Starter Homes and PRS

UK Housing Minister Gavin Barwell has hinted that there might be a rethink on the previous government’s pledge regarding Starter Homes.

Before the General Election, the Conservatives promised to deliver 200,000 “Starter Homes”, which it defined as affordable homes built by private builders and sold at 80 per cent of their market value – with a maximum of £450,000 in London.

Since then, the scheme has come under fire from multiple places, from housing charity Shelter noting that most first-time buyers would still be unable to afford the Starter Homes, while builders noted that land and skills shortages could make that target impossible to reach. The government has repeatedly been criticised by the industry for focusing more on encouraging demand from first-time buyers rather than boosting available supply.

Speaking at the Resi 2016 conference in Wales, though, Barwell hinted that the government’s policies to boost homeownership may be rethought, as part of a general shift from the housing ladder to the private rented sector.

Barwell said in a Q&A that ownership-driven policies might stop more homes being built and also stifle the number of homes available for tenants.

“There’s a little bit of a tension between the overall supply objective and measures specifically to help people onto the housing ladder,” he commented.

He was also asked about whether the government was still aiming to build 200,000 Starter Homes by 2020, but Barwell said that other property types, such as discounted rental homes, might be included in that number

“It’s obviously a manifesto commitment that we have, what I’ve got to look at is can we have a wider range of products in terms of affordable housing, and not just say that the only thing that qualifies is this one [tenure type],” he explained. “The way you make housing in this country more affordable to rent and more to buy is you build more homes. There is still a role for the government doing specific things to help people onto the first rung but this can’t be at the exclusion of all else.”

He also acknowledged that the private rented sector is “so important” to solving the housing crisis, emphasising the government’s commitment to building more rental properties.

“A growing number of families and young professionals are choosing the PRS, and while home ownership is still the goal for the majority, many will rent for some years before they buy,” he said. “I’m very clear that our ambitions will never be achieved without significant boost in institutional investment to the PRS, to ensure more choice and quality for people living in rented accommodation.”

His comments on the PRS follow a meeting with the Axe the Tenant Tax team, who are campaigning for a judicial review to overturn the previous government’s Finance Act 2015, which introduced a change in tax allowances for landlords that could potentially see smaller buy-to-let investors put out of business – something that would only exacerbate the housing crisis.

“We were impressed by how Gavin handled the meeting,” said the Axe the Tenant Tax organisers in a campaign update. “He took notes, listened intently and asked clarifying questions when he felt he needed to. At the end, he summarised well, asked us to rank in order of priority/concern all of the issues that we discussed and then he put his points across well. At times he agreed with us and when he disagreed, he explained his reasoning. He also spoke off the record with views that cannot be shared but left us with the impression that he understood the situation.”

For more on the Axe the Tenant Tax campaign, click here.


UK Starter Home plans suffer two defeats in House of Lords

12th April 2016

The UK government’s Housing Bill has suffered two defeats in the House of Lords.

The flagship scheme, which was proposed by the Conservative Party in the 2015 general election, proposes a range of measures to streamline and speed up the construction of much-needed new housing stock across the country.

A key cornerstone of that bill are Starter Homes, which the government would sell at a 20 per cent discount from the market value to new buyers. The proposals require one in five properties in new developments to be available to first-time buyers under the age of 40 at the 20 per cent discount.

Critics have said that because of the price of property in today’s market, the bill would only make affordable homes available to middle and higher-income earners. While the bill passed through the Commons, it struggled to make it out of the House of Lords yesterday, with peers backing two amendments to the bill.

The first would force buyers to repay the discount they received if they were to sell up within the first 20 years. The amendment would reduce the 20 per cent discount by 5 per cent for each year of occupation – extended from an initial eight-year period, which aims to deter buyers from cashing in on the opportunity.

Crossbencher Lord Best told the press the amendment would help “moderate” the generosity of the scheme: “It gets to the heart of the fundamental problem with this bill – namely the introduction of measures to generously subsidise home ownership schemes – with the subsidies being found by a transfer of public resources away from low-cost rented homes for less affluent households.”

The second amendment would allow local councils to choose how many Starter Homes are built in their area, in an attempt to ensure that affordable housing is introduced in the areas it is needed most.

The votes are a blow to the UK’s highest profile building initiative in decades, with the government no under pressure to get the bill through both the House of Commons and the House of Lords before MPs break up in May for the local elections.

Brandon Lewis told The Guardian: “This government is determined to help anyone who aspires to own their own home achieve their dream. The housing bill will increase housing supply alongside home ownership and we are doing this with the biggest housebuilding programme since the 1970s to deliver the homes our country needs.

“The government believes it is wrong that a 30-year-old couple’s aspirations should be thwarted by having to wait until they are 50 to benefit from the full value of their starter home.

“We will listen carefully to the points made in the debate but our manifesto commitment to introduce starter homes at a 20 per cent discount for first-time buyers is unwavering.”

The government will now attempt to overturn the amendments or persuade peers to back a revised version. A second line-by-line examination of the bill will take place in the House of Lords on 13th April 2016. It will then have to return to the House of Commons for the amendments to be approved.

Further amendments yet to be voted on include the extension of the Right to Buy scheme to housing association homes, with the Conservative leader at the Local Government Association, cllr David Hodge, calling for peers to block legislation that would force councils to sell their most expensive properties to fund the policy, due to the unintended consequences it might have upon the country’s affordable council housing supply.

“At a minimum, we urge peers to back amendments that allow councils to retain enough receipts from every home sold to be able to replace it in the same area,” he commented.

The government has already reached a voluntary agreement with some housing associations to extend Right to Buy to their properties.