The Governments Housing White Paper – What does it mean for you?
On 7th February 2017, the Government released it's Housing White Paper entitled “Fixing our broken housing market”.
The paper, as to be expected, has received mixed reviews from homeowners, investors and from people working within the property industry. The general consensus, however seems to be that this white paper simply doesn’t address the fundamental issues facing the property market, and offers little in terms of viable solutions.
I thought it might be usual to take a look at why this Housing White Paper has come about and what it says.
Why is the Housing Market Broken?
According to the government paper, the market is broken for the following reasons:
We haven’t built enough homes – Since the 1970s, we have built on average 160,000 new homes per year across the country and the paper states that we need to be building 275,000 or more houses per year to keep up with current population growth.
2. Housing is becoming increasingly unaffordable - Today an average house costs 8 times more than average earnings. It is predicted that by 2020 that only a quarter of 30-year-olds will own their own home and they report that more than half of the generation currently approaching retirement were homeowners by their 30th birthday. (the baby boomers!)
3. Planning permission takes too long and when permission is granted, building takes too long.
4. Rising rents make it even harder to save for a deposit.
What does this actually mean? - Whilst many agree that there is a need to build a lot more houses, the market forces of supply and demand mean that the lack of available housing to rent or buy will simply continue to push up prices. Although other factors such as the economy or Brexit may impact on this, rising prices are a continuing trend. Conversely, flooding the market with new homes could also have a negative effect.
And what about rising rents? The Royal Institution of Chartered Surveyors (RICS) has predicted that rents will increase by just over 25% in the coming years, especially as the demand for rental properties from tenants continues to rise. Whereas property values are set to grow by less than 20%. If current changes caused landlords to scale back their portfolios in the next 12 months, the prediction is that tenants will have fewer properties to choose from, which again is likely to push rents higher, the survey suggested.
Essentially though this Housing White Paper is about building more homes…
The White Paper states three ‘challenges’ which the government sees as potential hindrances to the increase in building which they deem is necessary.
Local planning authorities don’t have substantial plans in place to cope with the projected growth in households.
That development happens far too slowly
That the structure of the current housing market makes it harder to increase supply, and that the larger companies in the housing development industry can hinder new innovations in house building.
Although the White Paper acknowledges the fact that communities have concerns regarding new housing they never really stray from their message that local authorities will have to plan for new developments in the future. The Alfreton and Ripley area has seen many new developments built over the past few years and in the year 2016 there were approximately 500+ new homes built in Amber Valley. With this new government incentive it is very likely that more houses are yet to be built as we continue into 2017.
If you would like to read more information on the Housing White Paper as well as my analysis on the governments suggestions please see further articles on the subject on our blog.