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David Cameron’s Starter Homes Only Affordable to Those Earning Over £50,000
This article is an external press release originally published on the Landlord News website, which has now been migrated to the Just Landlords blog.
David Cameron’s 200,000 new starter homes will only be affordable to those earning over £50,000 a year and more than £77,000 in London, according to housing charity Shelter.
Shelter calculates that the new scheme to fuel low-cost homeownership will be unaffordable for average income households in six out of ten English council areas. The policy was the focus of the Prime Minister’s first Conservative Party conference speech today.
David Cameron’s Starter Homes Only Affordable to Those Earning Over £50,000
For those on the new living wage of £9 per hour in 2020, the homes will only be affordable in 2% of councils.
These figures weaken Mr. Cameron’s vow to help young people get onto the property ladder.
Last year, Mr. Cameron promised to build 100,000 new homes a year, but doubled it to 200,000 per year by 2020 in the Conservative general election manifesto.
Today, he explained in more detail how the Government will engage in a “national crusade to get homes built” and turn “generation rent to generation buy”1 by introducing incentives for developers to build more affordable homes, by relaxing planning regulations.
However, Chief Executive of Shelter, Campbell Robb, insists the new scheme will only benefit those already able to buy a home.
He explains: “You don’t solve an affordability crisis by getting rid of the few affordable homes we’re building, yet that’s exactly what this policy will do.
“Today’s announcement confirms our fears that starter homes costing up to £450,000 will be built at the expense of the genuinely affordable homes this country desperately needs.
“Our research has shown that these starter homes will too often only be affordable for higher earners, not the millions of people working hard for an average wage, who will be left stuck in expensive private renting.”
He concludes: “There’s nothing wrong with helping people onto the property ladder, but the Government has to invest in genuinely affordable homes to buy and rent for all of those on ordinary incomes who are bearing the brunt of this crisis.”1
Last year, 141,000 homes were built in the UK – just over half of the amount needed to prevent house prices continuing to soar.
In his speech, Mr. Cameron revealed the first steps towards increasing housing supply, by permitting developers to build affordable homes to sell, and rent, under their planning obligations.
At present, developers must set aside a certain proportion of their site to be used for affordable renting.
In the future, they will be able to sell these homes at a 20% discount on the price of other properties on the site. The Government will impose a cap on the amount that developers can charge for these homes – £250,000 outside of London and £450,000 in the capital.
