The Government has announced that it will directly commission the building of 13,000 affordable homes on public land in southern England.
40% of the new-builds will be starter homes, meaning they should be affordable for first-time buyers. It’s hoped that this new project will be able to help people onto the property ladder who have been struggling to afford their first home. It also marks the first step in the Government’s plan to have 200,000 starter homes built by 2020.
By directly commissioning the building of the 13,000 properties, the Government isn’t just creating a fund to encourage property building. It means that the Government will have direct control of the development of the land, rather than letting large building companies run the project.
Instead, smaller development firms will be able to buy sites in any of the five locations in southern England, with planning permission already in place. This will hopefully encourage the time it will take to get the homes built, meaning the first buyers should be able to move in as soon as possible. The locations where the homes are to be built are north-west London, Dover, Cambridgeshire, Chichester and Gosport.
The first of these 13,000 homes will built throughout 2016 with up to 40% of these designated as affordable to buy starter homes.
On top of this, the Government has also invested £1.2 billion into converting toxic brownfield sites into land that’s safe to build on. This will enable the building of 30,000 starter homes and another 30,000 market-rate homes over the next five years.
Back in November 2015, the Chancellor announced that 200,000 starter homes would be built by 2020, as one of a raft of property plans in the Autumn Statement spending review. The new properties that the Government has now committed to build aren’t on top of this figure – they’re just the first few homes of the 200,000. This still leaves a substantial amount of starter homes that needs to be built if the Government wants to meet its target in five years’ time.
The starter homes are an attempt to help first-time buyers afford a home, as they’ll be offered at least a 20% discount off its market value. A cap will be set on these properties to ensure they remain affordable – this will be £250,000 for the majority of the country and £450,000 in London. Critics of the starter home scheme have suggested that the cap has been set too high as many people still won’t be able to afford to buy properties that cost close to the limit.
The Government has also pledged to build 135,000 Help to Buy shared ownership homes over the next five years. This means you’ll be able to buy a share of your home and pay rent to a housing association on the rest. You’ll usually be given the option to buy more of your home, known as ‘staircasing’.
If you’re interested in learning more about shared ownership, check out our blog on the subject here.
Disclaimer: All information and links are correct at the time of publishing.