Yet more funding for housebuilders! Whatever became of austerity, “there’s no money left” and “balancing the budget by 2020”? So is the country now awash with spare cash? Of course not. According to the national debt clock, the UK is borrowing another £5,170 per SECOND or £1.86m an hour! The National debt is currently £1,762,340,000,000 (1.76trn), this equates to £28,291 for every person living in the UK or £48,600 for each UK taxpayer! So I find it totally incomprehensible that another £5bn is being added, to further and unnecessarily subsidise private housebuilding under the guise of increasing the number of new homes built.We have already had the ‘The Osborne Stupidity’ – ‘Help to Buy’ fuelling house prices and housebuilders’ record profits. Now we have the ‘The May Lunacy’ ‘Help to Build’, yet more funding for housebuilders. Last week the Theresa May’s government announced two major housing initiatives; a £3bn Home Building Fund – £2bn long term funding for infrastructure and £1bn short term loan funding aimed towards enabling smaller developers enter the market. As is often the case with government announcements of supposedly “new funds” £1.2bn of the £3bn was previously announced as the Large Sites Infrastructure Fund in 2015. In addition, a new £2bn “Accelerated Construction Programme” aiming at getting new homes built more quickly on public land.
The new £2bn fund is designed to provide 15,000 new homes on public land by 2020, supposedly by boosting housebuilding. How can this £2bn provide 15,000 extra new homes when the UK average house price is £216,750 (July 2016)? The £2bn fund will buy just 9,227 new homes in total, just over 3,000 a year to 2020! The eight largest housebuilders could easily build these with a modest increase in their output of around 4.3%, with Barratt adding just 745 more homes a year and Taylor Wimpey a mere 568. Surely it would be better, quicker and cheaper to force housebuilders to up their production, perhaps by taxing homes not started in their planning-approved landbanks?
The £2bn Accelerated Construction Fund, could be used to underwrite new developments on public land and could mean the government offer guarantees to developers that it will step in to buy properties housebuilders are unable to sell, according to Sir Edward Lister, the chairman of the Homes and Communities Agency (HCA), which will oversee it.
Lister told Property Week: “The way I see that going is guarantee money rather than anything else. So it’s about us going to a housebuilder and instead of expecting the normal build-out rate of 50 units a year we’ll say, ‘We want you to build all 500 in one go and what we’ll do is guarantee to take them off you if you can’t find a buyer”.
Property Week reported that the HCA would sell the homes on the open market or to private or social landlords with at agreed prices set before the government select which development schemes to back. How is a £2bn fund going to be able to step in and buy up to 450 extra homes on each site as Lister implies? Surely this latest scheme is being aimed at small house builders, probably following many weeks of lobbying by the Home Builders Federation (HBF) who were at last week’s Conservative Party Conference. So why isn’t this latest round of Government funding for housebuilders limited to those that currently build less than 30 new homes a year?
The Government will identify sites within its own property portfolio which can be built on by 2020 and will deliver outline planning permission and undertake the costs of some remediation work to reduce commercial viability risks on these sites. Hardly aimed at small housebuilders!
Unsurprisingly, the Home Builders Federation has been quick to back the new funding for housebuilders, suggesting it will help small firms come back into speculative housebuilding, even so it claims “more is needed particularly to help smaller builders play a part” HBF spokesperson Steve Turner said he expected small firms and new entrants to the market to be the biggest beneficiaries of the fund, which is also expected to offer land on a “buy now, pay later” basis and with planning permission already granted. Never mind “anyway you can de-risk that process will help” – it will be completely risk free! Talk about cake – both having it and eating it!
Taxpayers should be grateful that the fund is limited to ‘just’ £2bn. Free public land (no upfront cost) with planning permission and a guaranteed buyer at the outset, what’s not to like? Now anyone with a truck can make a 25% profit building homes for an outlay of just the building costs, around 40% of the value and they can get access to £1bn of short term loan funding for that too! All with the potential to leave the British taxpayer with impossible to sell, badly-built new homes.
The Government should be funding the building of council houses if it is serious about increasing Britain’s housing stock for everyone, not just aspiring home owners. The move towards a “dystopian meritocracy” with housing policies designed to grab the headlines is aimed purely at increasing the level of home ownership through government schemes, subsidising private companies within the industry and their customers, is as misguided as it is unfair. There is nothing wrong with renting a home. Britain should be building decent council homes, built by local building contractors, not subsidising an entire industry and its customers, with a policy which has so far failed in its attempt to achieve any meaningful increase in housing output and will in all probability, continue to do so, because plc housebuilders will never build the number of new homes needed.
It is time the government switch focus away from funding for housebuilders pursuing quantity and look to improve the quality of new homes. Housebuilders can well afford to build better quality new homes and give those that buy them better service when they find problems. All the measures recommended in the APPG Inquiry Report would also cost UK taxpayers absolutely nothing at.