With the General Election in May, the pressure is on for each party to make their pledge to the nation. Property is one hot topic for debate, and John Elliott, Managing Director of Millwood Designer Homes, gives his views on the housing election statements.
“I think the first point to make is that all parties are united in the fact that housing is a key election issue, that we need to boost the supply of homes across the country and make home ownership more achievable. I don’t recall this ever happening before at any time.
“The main problem is the shortage of new homes, and I have spoken about this many times in the past. Unfortunately, we have witnessed the lowest level of housebuilding in peacetime Britain since the 1920s, with fewer than half the number of homes we need to keep up with demand.
“Labour’s plan to get 200,000 homes built annually by 2020 is very encouraging, but I am concerned that they are highly unlikely to come to fruition because of the shear size of the problem, not least of which is the planning system.
“This is not the first time that Labour has pledged to build more homes. In 2007, they set a target of 240,000 homes to be built by 2016. This has been massively under achieved and because of that we are facing a housebuilding crisis with spiralling house prices and a shortage of affordable homes.
“Post World War II, the UK went into housebuilding overdrive, achieving more than 300,000 new homes a year for decades, reaching an all-time high of 425,000 in 1968. We have yet to reach anything close to that in recent years. In 2003-4 we saw 143,960 completions in England, rising to our highest figure over the last 10 years of 170,610 completions in 2007-08. Our low point was 2012-13 with just 107,820 completions.
We are going to need to build considerably more year-on-year to achieve Labour’s 200,000 target, which is actually modest when you consider that 250,000 new homes are needed each year to keep up with demand.
“In order to have any chance of coming close to these targets, there needs to be some big changes in the planning system, as well as local opposition to building.
“So what about the other parties? The Conservatives have promised to build 200,000 starter homes for first-time buyers in England under the age of 40, priced at 20% below the market rate, whilst the Lib Dems are aiming to deliver 30,000 new homes a year in England available to tenants who would slowly acquire equity as they made monthly rental payments, until after 30 years they owned the property outright.
“First-time buyers are the lifeblood of the property market, so these proposals are encouraging. The problem is that the Financial Conduct Authority has made it almost impossible to borrow money. Their requirements are so stringent that many people struggle to comply. Millions of working people cannot buy the homes they want – and today it takes an average family 22 years to save for a decent deposit on a home. The new regulations from the FCA are unquestionably what have prevented people from buying. The government even had to introduce Help to Buy in order to get things moving. The problem is one of affordability that was created by the FCA when they made their requirements so stringent and penile for deposits. In addition to this, the banks and finance companies also tightened up their rules, resulting in an ever exponentially deprecating problem.
This needs to change, because when you end up in a situation where the banks won’t lend, it denies young people the opportunity of owning their own home when they are perfectly capable of paying their mortgage each month. Without first-time buyers, the entire housing market grinds to a halt – and if buyers can’t buy, then housebuilders can’t build.
“Those that rent are finding their chances of saving for their own home reducing, with a reported nine million people who rent privately finding rent payments increasing faster than wages. In some parts of the country, like London, many homes are standing empty while new homes are often sold to foreign buyers.
“It’s clear we still need to significantly increase the rate of house building and continue to extend a helping hand to aspiring homeowners. That dream of owning your own home and the importance of the security and pride that gives us boils down to the fundamental British way of life. Not all countries value home ownership the way we do, but it’s who we are and it’s what this nation has been built on. To work hard and put that money into your very own bricks and mortar is so rewarding. To ensure a strong future for this country, we must build the homes that are needed and make sure that the dream of owning a home is achievable for everyone, no matter what their situation.
“Whatever the results of the election, I hope that this will be a reality for us all soon.”