14 COMMENT
give more support to the self and custom-built sector, helping to boost SME builders and creating new jobs in the construction sector. Earlier this year he helped to secure additional investment in the Help to Build scheme with m for equity loans in support of fi ve per cent deposits and a target of contributing 30,000 – 40,000 new homes a year. It is seen as an imaginative way of contributing to the Levelling Up agenda, of which Michael Gove is known to be a big fan. Homes England has already been tasked with fi nding more sites for providing self and custom build plots within regeneration projects across the country and more use made of modular factory-built units to boost custom homebuilding further.
THE END OF HELP TO BUY
Earlier in the year Mr Gove was winning plaudits for tackling the developers of dangerously clad high-rise blocks and sorting out a raft of regulatory changes in both the private and social rented sectors, but he also let it be known that he also wanted to review the mortgage market and whether it helped or hindered homebuyers. Before he was able to develop his ideas on this, he was sacked for suggesting to Boris Johnson that his time was up. Perhaps the time to reveal his ideas has now come.
ince one of the biggest in uences on the housing market has been the subsidy package known as Help to Buy. First introduced by George Osborne in the wake of the property crash, in its various forms and iterations it has helped over a third of a million people to buy their fi rst home. But since the end of October it is no more and at least for the moment, we have no idea what, if anything is going to replace it. Is this where Mr Gove could make his mark?
The impact of Help to Buy cannot be under-estimated although it had many critics for driving up prices and boosting the profi ts of volume builders. A House of Lords report determined that Help to Buy had not been ‘good value money’ for the taxpayer, with a forecast bill of over billion by the time it fi nishes. The report concluded that the money spent on Help to Buy would have been more effectively spent on building more new homes, which would be more likely to result in more affordable house prices.
Another drawback was that the scheme only applied to new homes, which do not grow in value as fast as older properties. New builds usually sell for up to 15 per cent more, but they lose this premium after a few years. A report by the consumer magazine Which in June 2020 reported that as the Help to Buy scheme’s popularity increased, so too did its price tag. etween April and
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the end of 2019, the average price paid by fi rst-time buyers in England for any type of home increased by 39 per cent. The average amount paid by all buyers of new-build properties also increased by 39 per cent. ut the amount paid by fi rst- time buyers using Help to Buy jumped by a much heftier 51 per cent, showing it was very good business for volume builders’ shareholders.
WHAT’S NEXT
Gove’s options for supporting housebuilding have been made more diffi cult by the parlous state of the public fi nances, but also by the lacklustre performance of the agency charged with delivering the Government’s vision for new housing and regeneration. Homes England has been underdelivering on most of its targets (particularly for low cost housing) and recently we learnt that more than half of the development sites transferred to the agency under the overnment’s agship land disposal scheme have still not been disposed of to would-be developers. The fi gures were revealed in a report reviewing the Government’s Public Land for Housing Programme, which ran from until arch . According to the latest update, which analysed the success of the fi ve-year programme, Homes England only disposed of 34 out of 73 sites – unlocking land for just 1,663 homes. Its original target had been to release suffi cient land from government departments to facilitate the building of 160,000 new homes. Under the guise of delivering on Levelling Up policies I expect to see ove’s department to support a focus on new developments at brownfi eld sites in urban areas, bowing to backbench pressures to protect as much of the green belt as possible. This would also be consistent with comments made by Rishi Sunak during the party leadership hustings after Johnson resigned. Personally I think Gove is also likely to
LEVELLING UP
A boost might also be given to the development of more shared ownership housing and this could be somewhere that mortgage reform could really play a signifi cant part by helping to simplify the legal and fi nancial design of products. This is a form of affordable housing that is already receiving a growing proportion of the overnment’s fi nancial support in comparison to rented housing and this is likely to continue. Recent tweaks such as allowing shared owners to purchase additional equity shares as small as one per cent have yet to make a signifi cant difference to the product’s attractiveness to buyers and it is thought Gove is looking for new ideas to re-market the shared ownership brand.
Local community led housing schemes may also benefi t from more investment, with a growing emphasis on land trusts and housing co-operatives to deliver local solutions to local problems, while staying under local control. Community led housing is believed to have a key role to play in improving the design and construction quality of homes using modern methods of construction, while giving more opportunity for smaller house builders to work on projects, growing local economies and regenerating derelict areas by delivering homes that are affordable for local people.
A key for new housing schemes will be in showing the impact they will be able to make to struggling areas. This is almost certainly where Michael Gove will show his support for new housing development. Whether his preferences can make the same impact on the market as Help to Buy, or can endure for a decade, is something that only time will tell but I suspect we are in for an interesting time which will keep those involved in housing on their toes and constantly wondering if they’ve got the measure of the Secretary of State.
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