The jury is still out on whether the government’s housing White Paper will address the challenge of fixing what is widely regarded as the UK’s ‘broken’ property market.
The paper, released on 7 February, outlined plans to build more houses, diversify the housing sector, improve affordability, and protect renters.
Unveiled by Sajid Javid, the local government and communities secretary, the paper contained a pledge to “get Britain building”.
Mr Javid said: “The housing market in this country is broken and the solution means building many more houses in the places that people want to live.”
The government pledged to continue to support people to buy their own home through the Help to Buy scheme and starter homes. It will crack down on empty homes and promises more action to address areas most affected by second homes.
However many in the industry were quick to dismiss the paper. Russell Quirk, property expert and chief executive of eMoov, said that the proposals “seem to only trim the fat from a system that is fundamentally broken".
Paul Goodman, chairman of the National Association of Commercial Brokers, said the paper was “re-treading old ground”. Jean Liggett, chief executive of Properties of the World, a specialist estate agent specialising in BTL and residential property, said the proposal of a £2bn Housing Infrastructure Fund was “just pennies”.
She said: “This translates to very little money per council across the UK, and thus will have little or no impact on addressing the acute housing shortage that the UK is facing.”
Ms Liggett argued that the government also appeared to be passing the buck to local authorities and doubted whether they would indeed get the support they needed.
She said: “As it is right now, due to austerity for a number of years, councils have had to cut back on key services. That has meant that planning departments are under-staffed and the many of the experts working in them have moved on to other jobs.”
Ms Liggett welcomed the proposal to extend minimum tenancy agreements to six months.
“I agree that tenancies must be longer than six months and one year (STAs). When I lived in New York in my 20s, I had a contract for 3 years.”
The Residential Landlords Association (RLA), which represents smaller landlords, argued that 2 per cent of smaller landlords are prevented from offering tenancies longer than a year by their mortgage lender or insurer.
Alan Ward, chairman of the RLA, said the government would need to encourage mortgage lenders and insurers to allow landlords to offer longer tenancies in order to make the proposals of longer tenancies a reality.
He said: “Any plan for the rental sector that does not provide equal support and encouragement for the vast majority of individuals making up the country’s landlord population is doomed to failure.”
Ms Liggett did not agree with one of the paper’s most contentious proposals – a ban on letting fees.
She said: “Agents offer a service and need to be remunerated properly in order to keep their doors open. By banning letting agency fees, the doors become wide open for the online agents who offer an inferior and sometimes non-existent localised service in the community for tenants.”
Ms Liggett also questioned who would build the properties. “What is the government doing to set up colleges, and apprentice programmes to train builders and plumbers? We are so far behind Germany. It’s no surprise that Germany is a manufacturing powerhouse, as they have apprentice programmes and in-house training programmes.”
Jonathan Stephens, managing director of leading property consultancy Surrenden Invest, said BTL investors, who had been “somewhat penalised by this government in recent announcements and subsequent tax changes”, appeared to be off the hook.
He added: “This paper shifts the focus to the desperate need to tackle the supply shortage. A shortage that would be even greater were it not for the said BTL investors essentially driving supply throughout the market.
“Only time will tell whether this latest White Paper, when put into practice, will produce a lasting effect on the country’s housing, or whether it is simply another plaster attempting to cover a broken market.”
Morten Nilsson, chief executive of Now: Pensions said the paper appeared to be addressing the impact of the ageing population on housing supply by encouraging the building of more retirement-friendly properties.
He said: “Our recent research revealed that downsizing their property is the preferred route for two-thirds of non-retired UK homeowners to release their property wealth. To be able to downsize, there needs to be enough suitable homes by the time they retire, of the types of homes that retired people want to live in. It is encouraging to see the communities’ secretary and the prime minister tackling this issue head on.”
Samantha Downes is assistant editor of Financial Adviser
White Paper: goals and priorities
In a bid to stop local authorities dragging their heels with planning permission, the government will offer higher fees and new capacity funding to develop planning departments, simplified plan-making and more funding for infrastructure.
To help developers, the government will encourage greater diversity of homebuilders, by partnering with smaller and medium-sized builders and contractors in the accelerated construction programme, as well as helping them access loan finance.
For housing associations and other not-for profit developers, the government has already announced funding worth a total of £7.1bn through an expanded and more flexible affordable homes programme. A potential worry for buy-to-let (BTL) investors is the government pledges to “provide clarity over future rent levels.”
For lenders, institutional investors and capital market participants, the government offered a “clear and stable long-term framework for investment,” including products for rent. In return the government called upon lenders and investors to back developers and social landlords in building more homes.
Key points
The housing white paper was launched on 7 February in a bid to see more houses built and to diversify the sector.
The government pledged to continue to support people to buy their own home through the Help to Buy scheme.
Opinion is divided over whether it will help the housing shortage.
