Government housing strategy: Reactions from around the property world
Monday, 21 November 2011 12:08 PM
The government today announced a new £400m initiative aimed at "unlocking the housing market"
Buyers of new homes are to be offered help by the government to borrow up to 95 per cent of the value.
Sixteen thousand new homes and 32,000 new jobs in England are the target for the government's scheme, which starts in July.
The main story is here, but we've also collated some of the reaction from around the property world:
Nick Pearce, Institute for Public Policy Research director:
“We are still suffering from an economic crisis that arose in large part because of the bursting of housing market bubbles around the world. To start subsidising access to mortgages again is to forget all the lessons of that crisis. It is not the way to pump-primp sustainable growth in housing supply.
“The housing strategy sets out ways to get land and money to developers but it does not ask enough of them by way of quid pro quo. It seems unlikely that the development industry will respond to these subsidies and build enough houses.
“The past two British house-building recessions, starting in 1972 and 1990, both resulted in ‘lost decades’ for housing output. With the lowest house-building levels since World War Two the danger is that we are now on course for another lost decade in British house-building.
“Today’s government intervention makes another lost decade of market stagnation more likely. There is a real danger that existing UK house-builders will merely use building on public land with public money to displace activity from less viable market sites – leading to no net increase in output. The housebuilding sector in the UK needs greater competition and structural reform if it is to deliver high quality homes at lower cost.”
Paul Smee, Council of Mortgage Lenders director general:
"This scheme is good news for home-buyers, developers and indeed the UK economy. Lenders will be able to reduce the level of deposit needed by home-buyers in the new build sector, enabling more buyers to buy and so supporting the flow of new housing development, with all its positive consequences for jobs and the economy as a whole."
Brian Berry, Federation of Master Builders director of external affairs:
"The scale of the housing problem is now so enormous that we need to increase the supply of new homes by at least 500,000, the equivalent size of Birmingham, by 2015, if we are to meet rising demand. If the government was seriously committed to increasing the supply it would reintroduce housing targets for communities that failed in their obligation to meet local demand.
"We shouldn’t forget that there are over 700,000 empty homes in England that could be brought back into use. Cutting the rate of VAT from 20% to 5% would help boost the renovation of these properties and help increase the housing supply within a very short time."
Ian Fletcher, British Property Federation director of policy:
“The housing strategy is a welcome first step towards a coherent and long-term vision for house building in this country and it is good to see the government recognise the importance of encouraging investment in to the private rented sector, something that will be vital if we are going to see the necessary number of homes built to meet demand.
“We would urge the government to press on with this quickly. The strategy is welcome but it comes not a moment too soon with house building at historical lows and the general economy in dire need of support. In practice this means bringing forward sites for build-to-let by next April, at the latest, and conducting a swift independent review by somebody with intimate knowledge of the sector.
“Likewise, we would urge government to get its ideas on converting empty offices in to new homes by next spring.”
Stuart Law, chief executive of Assetz:
"It is good to see today's announcement from the government offering to underwrite some of the risk of higher loan to value mortgages via an indemnity fund supporting up to 95% loan to value loans. This is exactly the structure we suggested to HM treasury earlier this year and will leverage some risk capital provided by housebuilders to a level where 95% mortgages are possible again.
"We are talking about providing mortgages to high quality buyers who can more than afford monthly mortgage repayments but who are simply struggling to save the much larger deposits now required, so I expect the risk to taxpayer's cash to be very small.
"The enormous benefits to the wider economy will far outweigh the negligible risk of mortgage defaults, and the announcement of the £400 million investment fund to support development could be the kick start we need to start building our way out of this recession."
Jo Eccles, Sourcing Property director:
“There is still a fundamental problem with the market in that house prices are simply too high versus real wages. The affordability isn’t there and the government’s schemes, whilst they will make the housing ladder more accessible, do not address the problem of inflated prices in the rest of the market.
"It would be much more sensible for us to see a correction of prices which will hurt in the short term but bring the market to sustainable and affordable levels in the long term.”
Samantha Baden, Property Analyst at FindaProperty.com:
"Building more homes for first time buyers and freeing up mortgage finance for them is crucial in getting the entire UK housing market moving more freely.
"Our analysis shows that the average family in rental accommodation will now be paying around £890 a month or 46.2 per cent of their net monthly income on rent, so enabling more first time buyers to get their first home and introducing Right to Buy for social housing tenants is an important step forward. Getting your own home is a critical step in helping boost people's economic confidence and giving them a platform to build an investment for the future. We welcome this initiative as a valuable way to kick-start the first time buyer market."
Mark Montgomery, commercial director of 1st Property Lawyers:
"A sensibly structured mortgage guarantee scheme is a simple but positive idea that many have been calling for since the start of the credit crunch. We fully support the government's scheme to help first time buyers of new homes if the eligibility criteria are realistic. The details remain to be seen but we need initiatives that work in practice not just on paper."
“First time buyers are crucial to a healthy property market as they are not tied to a chain and therefore greatly increase movement. A scheme that allows for higher LTV [loan-to-value] products to be offered would make home ownership a more achievable prospect for younger people again, which has to be welcomed.”
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