Is Cameron’s affordable housing reform simply a recycling of Margret Thatcher’s “Right to Buy” or actually something helpful to property developers?
As Architects Journal reported this morning, David Cameron has today announced reforms to the affordable housing quota system at the Conservative Party Conference. Developers are to have the option of providing starter homes to be sold at a discounted value rather than the Affordable Housing quota.
It is clear that the government is making a commitment towards starter homes and helping 20-30 year olds to buy their own home. However many, including the charity Shelter, question how far this move will actually address the housing crisis or indeed help smaller developers.
Currently affordable housing is defined as available at 20 per cent below the market rent and it would seem Cameron’s idea is to make these homes available to buy. However in August Shelter reported that 58% of families would not be able to afford ‘starter homes’ Is not the rock of the crisis a lack of viable finance options both for building houses and buying them ?
Without doubt developers will be delighted not to have to contribute to affordable housing but what shape will the new proposal take? Currently the affordable contribution has to be paid in advance of building. Hence the developers contribution (in the form of the discounted sale price) would come out of the profit rather than upfront and logically should (interesting word) increase liquidity and be good for the market.
No doubt we will see in the coming weeks, months the detail of this reform and its effect on the property market. In the meantime, Luke Jooste, head of real estate finance at Funding Circle takes the view,
“All of the political parties have failed to address a major issue holding back housebuilding: a lack of finance for small developers, who are the bedrock of a healthy market. To meet demand, Britain needs to get finance to more small developers, whose market share has fallen from two-thirds in 1988 to just over a quarter in 2013.”
Architects Journal read the full article http://www.architectsjournal.co.uk/newsletter/news/cameron-set-to-scrap-affordable-homes-quotas/8690023.article?WT.tsrc=email&WT.mc_id=Newsletter275
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