New Government housing plans ‘will only benefit developer profits’, claims senior Leeds councillor
Plans announced by the Government to help first time buyers onto the property ladder will only benefit the profit margins of large house builders, according to the head of an influential group of Leeds councillors.
As part of the Government’s affordable homes policy, announced in May, “first homes” would need to become part of a council’s planning policy, meaning developers would have to sell a proportion of new homes at a 30 per cent discount on local market rates.
Current council planning rules have different targets for affordable houses for new builds in each area of Leeds.
Houses designated as “affordable” have to be sold or rented at 20 per cent below local market rates.
But “affordable” housing targets also include social rented properties, and the proposed new rules state 25 percent of homes that would otherwise be classed as “affordable” must instead be first homes for sale.
Chairman of Leeds City Council’s Development Plans Panel Coun Neil Walshaw (Lab) told a meeting of the group the new rules could simply mean more money would end up in the pockets of developers, while those unable to buy would be squeezed out.
He said: “There are a lot of serious and structural problems with this as a policy approach – this is not how we should be spending public housing pounds. It is extremely inappropriate.
“It is building on the disaster of the starter homes policy where no starter homes were built.”
“Every first homes discount that goes, it’s a genuinely affordable home that has not been built,” added Coun Walshaw. “That will eat into the amounts of affordable rented homes provided
in the city. It will do nothing to address the structural housing problems we have in the city.
“Not only is it difficult and lengthy, it’s not a serious policy for affordable housing. It’s trying to address systemic market failure by pushing precious public housing pounds into volume housebuilders’ profit margins, and that is all it’s going to do.”
First homes would be funded mainly by contributions from developers, known as s106 payments, which usually go towards infrastructure improvements to help balance out the effects of new housing developments.
Coun Walshaw also questioned whether a 30 per cent discount was appropriate, considering the high house prices in the city.
“I have a lot of constituents for whom 30 per cent off market prices is not really affordable at all,” he added. “A 50 per cent discount might slightly bring it down to their level, but it’s still an incredibly large amount of money considering what’s on sale in the city.”
The meeting was then told that government allows councils to go for 30, 40 or 50 per cent discount – but that 40 and 50 percent would need further planning and justification to get Government approval.
According to council documents, a first home would only be available to first time buyers whose household income was below £80,000-a-year.
Coun Dawn Collins (Con) asked council officers how first time buyers would be means-tested, to which the council’s head of strategic planning Martin Elliot responded: “There is an administrative burden through this change of policy, and that is likely to fall on the council.
“At this stage I can only say it will be similar to how we manage waiting lists and how housing associations manage rental properties, through some demonstration of need and income.
“There are some rules and regulations that will need to be applied, but that is another side of this, other than planning, that need to be worked out.”
He added that the council would likely bring forward more detailed plans of its own on this in September.
A statement from Government minister Lord Greenhalgh in May stated: “The Government is committed to supporting people to own their home and make home ownership a reality for households and families.
“Since spring 2010 almost 709,000 households have been helped by Government schemes, including Help to Buy and Right to Buy, and we are taking steps to increase the supply of new housing.
"The Government is undertaking the most ambitious reforms to our planning system since the Second World War, making it easier to build homes where they are most needed, and the stamp duty holiday (applying to the first £500,000 of property sales) has given a much-needed boost to the economy.
“Ensuring access to home ownership remains a key priority and challenge for this Government. However, rising prices, high deposits and difficulty accessing mortgage finance still mean that far too many people are denied the opportunity to own a home of their own.
“Polling shows that 87 per cent of people would prefer to own their home given a free choice.
"Therefore, the Government is determined to ensure that there is an adequate supply and variety of options to help hard-working people onto the housing ladder across England.”