British prime minister David Cameron has pledged to double the number of homes built for first-time buyers by the end of the next parliamentary term in a bid to tackle Britain’s housing shortage.
In a speech in Colchester, Essex, yesterday setting out the final part of his Conservative party’s six-point campaign platform for the May 7 general election, Cameron said 200,000 properties will be built by 2020 under his starter-homes plan. Prices of the homes, only available to first-time buyers under the age of 40, will be capped at £450,000 (€620,000) in London and £250,000 (€345,000) outside the capital. Reduced planning constraints will make it easier for developers to cut building costs, allowing the homes to be sold at a 20% discount.
“This policy will work not least because the property developers, the builders, the building industry are all coming out and saying they’ll deliver it,” Cameron said. “Here in Britain, we haven’t delivered enough homes for young people to buy.”
Cameron’s Tory-led coalition has already sought to address a housing shortage with policies such as Help-to-Buy loans, mortgage guarantees, and an existing pledge to build 100,000 starter homes. While mortgage rates are at record lows, lack of supply and high demand has pushed up prices.
This latest pledge is part of Cameron’s attempt to rebuff opposition Labour Party criticism that his policies only benefit the wealthiest. The average national house price is now £279,004, up 6.6% from a year earlier. The average for Greater London has risen 9.7% to £582,438.
He restated the Conservatives’ commitment to extend the first-part of the Help-to-Buy programme, targeted at buyers of newly built homes, to 2020. The plan offers homebuyers an interest-free government loan of 20% of a property’s value if the buyer makes a 5% down-payment. Cameron said 77,000 buyers have already used the programme.
“Our commitment is to extend the equity-loan part of Help- to-Buy for the whole of the next parliament, helping another 120,000 families to buy a home of their own,” Cameron said.
The starter homes will not be available to buy-to-let investors. Developers such as Taylor Wimpey and Barratt Developments have already signed up to the plan. A special levy to claw back the 20% cost reduction of the home will be applied to buyers who seek to sell the property within the first five years of purchase, Cameron said.
“In the last five years we’ve put £90bn of both public and private investment into building more homes,” Tory chairman Grant Shapps told Sky News. “Going forward, we are going to have a very similar programme where we enable houses to get built by yes, some government support, that is part of what we’re talking about, but also by the market stepping up to the plate.”