Two bad offers for first-time buyers

At the Tory party conference all the housing talk is about getting people to buy, buy, buy. But are the new offers that have been put on the table any good? If I was a first-time buyer, I’d have nothing to do with either of them.

First up was Rent to Buy, which Eric Pickles ‘announced’ at the weekend before the conference started. This meant the scheme has now been announced three times, the first more than a year ago. It was put forward in the 2013 Spending Round last June, when it was welcomed by the Homes and Communities Agency. Then it was announced again in May, when the DCLG expected ‘huge interest’ in it. And – finally, perhaps – by Eric Pickles in the run up to this week’s conference, with the Telegraph taking the bait last Thursday.

It’s difficult to say anything good about the scheme, except perhaps that it might be better than the one David Cameron was to announce a day later (see below). Tenants will have to pay Affordable Rents at up to 80% of market rates, and will be able to buy after seven years. But how could a tenant who doesn’t have a deposit now save for one in seven years, while paying such high rents? The chances are the plucky tenants will remain just that – tenants – eventually creating a problem for the housing association who built the properties and whose finances may well require them to be sold. This is especially the case in London – to which half the money has been directed.

At least the houses will have been built by social landlords and will presumably be of good quality. Under the second scheme called ‘Starter Homes’, the houses will supposedly be 20% cheaper because they are exempt from Community Infrastructure Levy (used to pay for the roads, sewers, etc) and from section 106 obligations (used to require social housing to be included in the scheme or to require a payment in lieu). Local authorities ‘will still get the taxes which pay for the key infrastructure requirements these homes need – but not more’. But what taxes will these be? They’ll also be exempt from ‘future regulations’ like the zero carbon standard (and presumably other standards included in the recent Housing Standards Review). So the homes will – by definition – be sub-standard and will therefore very likely be of the minimum size and quality that builders can get away with.

Then they will be built on ‘brownfield land’ already zoned for development, that is no longer needed for industrial or commercial uses, including public sector sites. This land ‘costs less’ than other land, but isn’t normally made available to build houses on. Making it available will ‘make a saving’ which will be passed on to the buyer.

There is a whole lot of wishful thinking here. How many sites are there that meet these criteria? Has anyone checked? Will public bodies like the NHS really sell land cheaply? – it seems most unlikely. Are the would-be industrial sites contaminated (and needing expensive treatment)? Are any of them in suitable locations for housing developments? Or will the homes be stuck on the edge of town, remote from bus services and schools, and tagged onto business parks or industrial estates?

It’s amazing that the media soak up these stories without posing questions like these. They accept the 100,000 target figure, which appears to be plucked from the air, and don’t ask what kinds of compromise will be needed to make them profitable to builders, or whether local authorities will actually give planning permission for sub-standard houses on undesirable sites.

One can only conclude that the proposal – which carries no government financial support – is aimed solely at the conference goers and at the press. Whether any real first-time buyers will ever see the houses, or if they do whether they’ll want to buy one, is a question for another day.

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