Government seeks housing crisis resolution

Housing minister Caroline Flint has announced a package of measures designed to alleviate the current challenges in the housing market.

Key among the proposals is a so-called 'rent now, buy later' scheme, which will allow first-time buyers earning under £60,000 annually to rent a new home at a discounted rate for a period of two to three years.

It is hoped the affordable rent, which will be 80 per cent of the market rent or less, will enable the household to save for a deposit to eventually buy a share in the home.

The new scheme will be offered until the title Rent to Home.

"The package being announced today will both help people facing difficulties right now, and lay the foundations to help meet the long term housing needs of the country," said Ms Flint.

"That means being ambitious, but also practical and realistic, acknowledging not only the difficulties faced by individuals and families, but for those who work in the house building industry."

A new drive to build partnerships between the public and private sectors was also confirmed, with the aim of putting councils back at the centre stage of providing homes.

Under this new partnership between councils and the private sector, councils put forward their surplus land into the Local Housing Company and have a full part in agreeing the development, which must include at least 50 per cent affordable homes.

In return, private sector partners, provide the equivalent investment and homes and skills needed to build the homes.

The first four pilot Local Housing Companies (LHC) will be operate in Barking and Dagenham, Newcastle, Nottingham, and Manchester.

Ms Flint also announced more funding, beyond the £200 million already allocated, to buy unsold stock from house builders for affordable homes, could be made available.
The initial announcement was much criticised for the small sums involved – which would allowing the purchase of just 1,500 homes – with no firm commitments of additional funds made.

Finally, the measures will see the first tranche of a £510 million funding pot to reward councils who are working to bring land forward for development allocated.

"We are determined to continue to do everything possible to promote long-term stability and fairness in the housing market," said Ms Flint.

"The international credit crunch has created significant challenges not just for the UK housing market, but in other parts of Europe and the United States.

"However, the long term need to provide more homes has not gone away. We have a growing and ageing population and will only see worsening affordability unless we increase housing supply."

Some sectors of the property industry have welcomed the moves.

"It is reassuring to see the government finally offering much needed measures of support to the housing market," commented Nicholas Leeming, director of PropertyFinder.com.

"The schemes proposed to boost the building industry need to be implemented immediately and aggressively.

"Our research shows that at current expected building levels and household growth, England will literally run out of homes by 2011."

However, the Royal Institution of Chartered Surveyors (Rics) argues the scheme will not go far enough to help first-time buyers.

"Rent now, buy later schemes are one solution, but today’s announcement only puts in place a pilot scheme and is restricted to households earning less than £60,000," said Rics policy officer, James Rowlands.

The organisation argues there will be little respite for people on lower quartile incomes, who will still struggle to save the £27,738 needed to pay the upfront costs of buying a house.

"It is time for the government to take bold action to tackle the problems in the housing market and innovative solutions must be put in place now to help people who want to buy a home but cannot get a mortgage," added Mr Rowlands.

"This measure will only have a limited impact on the wider housing market unless it is rapidly expanded to include all first-time buyers."

Chris O'Toole