UK housing white paper: Investor summary

UK housing white paper: Investor summary

The much anticipated housing white paper, outlining reforms to the current housing sector and plans to tackle the UK’s housing deficit was published today (February 7th) with the government saying measures outlined in the paper will fix the “broken housing market”

What is the housing white paper and why does the UK need it?

An undersupply of homes combined with a growing population has led to a mismatch between supply and demand in the UK housing market. Subsequently property prices have risen in recent years to levels that are simply unaffordable for many. On average, house prices are now almost eight times that of the average person’s income, while over 1.6 million people are on housing waiting lists, including 124,000 homeless children.

With the UK population set to increase by 10 million over the next 25 years, the need for homes will only grow. With the objective of rectifying the housing supply crisis, the government has set itself a target of building 1 million homes by 2020.

The white paper outlines the government’s housing strategy for the foreseeable future, detailing a number of necessary reforms needed within the planning and development sectors. The paper also contains punitive measures for developers designed to speed up delivery and encourages local authorities to deliver more detailed plans for housing in their area, in a bid to speed up the local planning process.

 

What does the white paper say?

The paper focusses less on increasing home ownership and more on simply delivering enough homes to tackle the housing deficit.

According to Housing Minister, Gavin Barwell, we need “all different kinds of tenure – for outright ownership, shared ownership and for renting.”

The key points revealed in the plan are outlined below:

The private rented sector and build-to-rent

  • Recognising the need to cater for the growing rental population, the government wants to ensure developers provide significantly more new and affordable rental homes and are therefore making build-to-rent a key focus of the housing strategy.
  • Family friendly tenancies of three or more years in purpose-built renting schemes will be encouraged to all customers, providing more security and a real sense of home for tenants.

Planning rules

  • Amendments to planning rules will allow councils to provide more long term build-to-rent homes.
  • The length of time allowed between planning permission and commencement of construction will be reduced, cutting down on land banking and speeding up delivery.
  • Protection for the green belt will be maintained, with permission to build only granted in exceptional circumstances.

Council power and responsibilities

  • Councils with high demand for housing will be required to produce an up-to-date plan for housing demand and set ambitious building targets.
  • In a bid to clampdown on land banking, councils will be given more power to pressure developers to start building on land they own.

Land and development

  • More inner city sites close to transport hubs will be targeted for residential development.
  • Developers will be expected to avoid low density housing where land availability is short.
  • Through the £3bn home building fund, the housing market will be diversified and opened up to smaller builders and those who embrace innovative and efficient methods.

Home ownership

  • Support for people looking to buy their own home will continue to be offered through Help to Buy and Starter Homes.
  • A “lifetime ISA” will help first-time buyers save for a deposit.

What does it mean for you?

Renters

Renters can expect more security from their tenancies, as well as a larger of choice of higher quality, purpose-built properties at more affordable prices.

Buyers

With an increased supply of available housing, it is hoped that house prices will become more affordable to those looking to buy their own home as the mismatch between supply and demand stabilises.

Investors

With build-to-rent high on the government’s housing agenda, investors can look forward to a new, high-quality and efficient residential asset class. The current private rented sector is hugely undersupplied and the government’s commitment to build-to-rent represents a major opportunity for investors, especially those previously deterred from buy-to-let investments as a result of recent changes and restrictions, which saw the banning of letting agent fees and an increase in stamp duty.

To view the white paper for yourself, click here.

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