Major new plans to boost the UK housing sector have been widely welcomed but there is some concern that they won’t have much of an impact right away.
The new strategy includes first time buyers being able to borrow up to 95% of the value of a new property and the introduction of a £400 million fund to help boost house building by providing grants to builders to develop plots of land that are currently considered to be uneconomic.
Michael Newey of the Royal Institution of Chartered Surveyors said that is shows housing is now at the top of the political agenda.
‘Better access to mortgage finance is essential to bring forward the new homes needed to help more achieve their aspiration of home ownership, particularly first time buyers. The New Build Indemnity Scheme is to be welcomed but care must be taken to ensure it does not distort the market or lenders affordability calculations,’ he said.
‘The focus on new build will not free up chains and may reduce demand for second hand property, putting those who wish to move but have little equity at a disadvantage. Whilst any attempt to stimulate supply and demand will help both consumers and developers, limiting funding to niche areas of the market in this way does not solve the wider need for adequate levels of funding in all parts of the market. Any new scheme must be clear and easy to understand for the consumer,’ he explained.
He also pointed out that while small to medium sized developers will particularly welcome the Get Britain Building Investment Fund and the recognition of the key role house builders will play in driving much needed economic growth, homes need to be built where people want to live.
‘Further steps to free up public land for developers are encouraging but care must be taken that the land is in the right place with the right infrastructure. Projects must be properly analysed for viability otherwise developers run the risk of creating white elephants that do not satisfy demand.
‘This is a good start from the Government but more detail is needed. RICS looks forward to continuing engagement with the Government and the sector to deliver a sustainable housing market that delivers aspirations across all sections of the market, benefiting UK PLC as a whole,’ he added.
Jim Ward, director of Savills residential research, said that if the level of house building activity in the UK is to be increased, the market for new build schemes needs to grow.
‘This means that the potential market needs to be expanded, through improved access and affordability and also, the viability of individual schemes needs to be ensured,’ he said.
But he added that the proposed mortgage guarantees alone will not be enough to get the market moving.
‘With the private rented sector growing significantly in potential, it is likely that institutions will become active in investing and funding residential letting developments particularly in London where rental growth prospects are greatest. Our five year forecasts are for stronger rental growth than capital growth in all parts of the country,’ he added.
Roger Hepher, head of planning and regeneration at Savills also said location is important.
‘On three occasions in the last few weeks in Winchester, Sandbach and St Austell, the Secretary of State has stepped back from granting planning permission for substantial private sector schemes out of deference to local objectors,’ he pointed out.
‘Reconciling economic growth with localism was never going to be an easy call, but, if growth really is the Government’s top priority and if averting the nationwide housing crisis is a close second, we need to see some robustness in Ministerial decision making,’ he added.