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Earlier this month the government released its eagerly-anticipated housing White Paper. The 104-page document sets out how the Conservative Party intends to improve the supply/demand imbalance of housing in the UK.
Titled 'Fixing our broken housing market', the document was unveiled by Communities Secretary Sajid Javid and includes comment from the Prime Minister Theresa May.
It sets out 29 objectives which the government hopes will help improve the provision of rental and owner occupier housing. The objectives are split into four categories: 'Planning for the right homes in the right places', 'Building homes faster', 'Diversifying the market' and 'Helping people now’.
As expected, the White Paper has been welcomed by some and criticised by others. But how will it impact estate and letting agents?
Rental sector focus
One of the key takeaways from the White Paper is that it is quite clear the government is keen for the Private Rented Sector (PRS) to growth further.
One of the principal rental sector objectives - and something that will have a direct effect on agents - is to 'make renting fairer for tenants'. While on the surface this proposal may seem a bit vague, the White Paper does explain that this measure includes introducing longer tenancies and of course going through with the proposed ban on letting agent fees charged to tenants.
There'll also be further encouragement of institutional investment in the fledgling Build to Rent sector - in which three-year tenancies will be the standard.
Housebuilding should become easier
When it comes to the owner occupier market, the White Paper makes it clear that the planning and housebuilding processes need to be simplified if the country wants to up its annual production of homes.
There is a pledge to make leasehold terms fairer, which is aimed to benefit house buyers, while there are also commitments to cutting red tape and providing free public land for construction.
Sajid Javid reiterated that there will be no building on the Green Belt – except in extreme circumstances. Other ideas put forward in order to stimulate the house building and property sales markets include clarifying what land is available for development, targeting the £2.3 billion Housing Infrastructure Fund and backing small and medium-sized house builders to grow.
Response and reaction
There has been a mixed response to the publishing of the White Paper. A number of the proposed measures have been welcomed by housing and property experts, but the main criticism is that the government’s plans aren’t bold or innovative enough to make a significant difference.
Here is what the trade bodies representing estate and letting agents had to say…
Mark Hayward, Managing Director of the National Association of Estate Agents (NAEA):
“Only 32,000 affordable homes were built in 2016, and this is totally unacceptable, especially given the number of homes we really need.”
“The announcement the government plans to diversify the market by opening it up to smaller builders who embrace innovative and efficient methods is great and could go some way in helping deliver a vast number of homes quickly.”
“However, it’s vital the government considers the cost of building modular homes and understands these could remain unaffordable and unsuitable.”
“Plans to help older people move at the right time and in the right way to free up homes for other buyers is an important issue and something we believe would make a big difference. Around two fifths of homes in the UK are owned by those aged over 65, who have no desire to move as they do not want to sustain the costs or stress involved with moving. They are considered ‘bedroom blockers’ and are the main reason why there are a large number of homes with two or three spare bedrooms.”
David Cox, Managing Director of the Association of Residential Letting Agents (ARLA):
“We are pleased that the government has signalled a move towards a mixed tenure approach to house building and recognised that owner-occupation is not the only option available. It is important that we have a housing market that works for everyone, not just for those who own their own property.”
“ARLA welcomes plans to encourage more institutional investment to boost the number of properties available for rent. Any proposals that increase supply should be applauded.”
“However, this approach should not be at the expense of small landlords. Experience has shown that, even in countries where institutional investment has been encouraged, it still only makes up a small part of the sector. Small landlords are vital to the health of our rental sector.”
“ARLA welcomes any attempt to improve stability in the housing market and it is important that tenants feel that they are secure in their homes. [We] have been working closely with DCLG on proposals for incentivising longer term tenancies; after all, it is in the best interests of landlords, tenants and agents to have long, well maintained tenancies.”
The government now has around three years to implement its changes and make a difference. It is likely to be judged strongly on its housing performance in the run up to the next general election in 2020.
A number of the proposals put forward this month will require changes to the National Planning Policy Framework if they are to be implemented, while others will require consultation. All of which is likely to take weeks and months.
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