David Cameron, in his speech at last week ‘s Conservative Party conference, announced a shift in policy regarding the affordable homes requirement on new builds in the UK. He plans to scrap the requirement in favour of a ëstarter homes ‘ plan, with the intention of fuelling the first-time buyer market, rather than promoting affordable renting schemes.
Redefinition of Affordable Housing
The crux behind Cameron ‘s proposed change is essentially a redefinition of the term ëaffordable housing ‘, allowing it to include homes to buy not just home to rent.
The new plan, Cameron believes, will help to free up the currently frustrated house building market by removing the barriers placed on developers that requiring them to dedicate a certain portion of their builds to affordable houses to rent. It also will be instrumental in helping the Conservatives to meet their target of constructing 200,000 new, affordable, ëstarter homes ‘ over the course of their current term of government.
In defence of the policy change, Cameron cited recent surveys conducted that showed that 86% of individuals in England and Wales would rather buy than rent.
He said in his speech: “for years politicians have been talking about building what they call affordable homes but the phrase was deceptive. It basically means ones that were only available for rent. What people want are homes they can actually own.”
He called for a “national crusade to get houses built,” adding that this means “banks lending, government releasing land and, yes, planning being reformed.”
Private developers are welcoming the change as properties bought bring them much quicker returns than properties rented. It can often take as long as 20 years for a developer to see financial return on a newly built property that is put straight on the rental market.
Under the current definition, in order to meet the affordable housing requirement, homes must be available to rent at 20% below the standard market rent for the area.
Once Cameron ‘s changes come into play, it will include homes for sale with their price capped at £250,000, or £450,000 in London.
Is affordable really affordable?
Cameron has come under criticism from groups such as the homelessness charity Shelter, who argue that scrapping the current requirement is dangerous; that the ëaffordable ‘ label under his redefinition is something of a misnomer.
According to their calculations, only people who are earning £50,000 (or £77,000 in London) and who aren ‘t planning on starting families will be able to afford one of these new ëstarter homes ‘. This, they argue, makes these starter homes unaffordable for those earning a statistically average income in 60% of council areas in England.
Further, for those living on what the government are marketing as the new ëliving wage ‘ (£9 per hour, to be reached by 2020), starter homes will be affordable in only 2% of English council areas.
Campbell Robb of Shelter praised Cameron ‘s ostensible aims but questioned his execution, saying that: “there ‘s nothing wrong with helping people on to property ladder, but the government has to invest in genuinely affordable homes to buy and rent for all of those on ordinary incomes who are bearing the brunt of this crisis.”