In response to the County Times Comment ‘Drive to expand home ownership’ (3.12.15).
The government is to be congratulated on the taxation measures it has taken to discourage the growth of the private rented sector. Oh that this had happened years ago!
Since 2008, banks and building societies have made it much harder for young people in their 20s and 30s to get mortgages to buy their own homes. Deposits of 20 per cent have been demanded and household expenditure has been examined by lenders like nothing previously. At the same time, house prices have risen hugely at a time when inflation has been low, or non-existent.
Government is now at last attempting to re-balance the market. It is giving tax and savings breaks to first time buyers. These are nowhere near as generous as the tax reliefs that were on offer 40 years ago, but are a move in the right direction.
The country needs a private rented sector. There will always be people whose personal circumstances mean they choose to rent, rather than buy. Tenants are best served by professional landlords whose job it is to run a business within all the safeguards of tenancy law, regulated by local councils. Such landlords are far more likely to give longer tenancies than the six months usually given by amateur private landlords. Too many people – often with families – have continually faced eviction and finding another home simply because the landlord has decided to end a tenancy – for whatever reason. This can have a massive detrimental effect on people’s lives and stop them putting down roots and children being settled as they move schools.
The government has got it seriously wrong in its decisions on social housing in its Spending Review and the Housing and Planning Bill.
In order to reduce the housing benefit bill, housing associations and councils are required to reduce rents by one per cent per annum each year for four years. Only two years ago, it promised that rents would rise by inflation plus one per cent per annum for ten years. Business plans were drawn up and loans taken out on that basis.
The change will reduce associations’ income by about 13 per cent. Therefore, savings of that amount need to be made. In Saxon Weald, we are making significant savings in our running costs, whilst at the same time attempting to preserve the service to our tenants. Just like other associations.
One of the biggest savings is that we will have to reduce our house-building programme from 180 a year to 120 a year. It is estimated that nationally housing associations will now build 6,800 less homes each year. This at a time when only 140,000 homes were built in total in the country in 2014/15, against a need of over 200,000 per annum.
But it gets worse! The people who will really miss out as a result of government changes are those who are never going to earn enough to buy in the market-place – whether outright or by shared ownership – because they don’t earn enough. In Saxon Weald’s revised development programme, only 30 per cent of homes will be for affordable rent. The rest will be for outright sale, shared ownership or market rent. That activity needs to make a surplus to subsidise affordable rent, now there is no government grant. This is at a time when there is massive demand for social housing from those who cannot afford market prices to buy or rent.
The final government change that will be so unhelpful to the future of affordable housing is to require that the ‘affordable’ component of new housing development sites will be for affordable house purchase. Government subsidy will go to ensure that first time buyers under the age of 40 will be able to buy homes for £250,000 outside London and £400,000 in London. This will clearly be welcomed by the first time buyers, but will be at the expense of people on low incomes who would otherwise have lived in social housing in a proportion of homes on new development sites. Government must answer the question as to where people on low incomes will live in future.
Chief executive, Saxon Weald, Worthing Road, Horsham
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