New Buy Scheme Slow To Take Off

The Government’s New Buy Scheme was launched in March amidst a great fanfare and hopes that the plans would give the property market a much needed boost. Six months on however, the first set of purchase figures have indicated a slow start to the scheme.

In the four months from the launch of the initiative, only 250 homes were sold through the scheme. Overall, the coalition were looking to help 100,000 people move by the end of 2015. Writing in his newspaper column in January, the then Housing Minister Grant Shapps underlined his hopes for the new buy project.

“At the heart of the (government) Strategy is a new-build indemnity scheme, which will offer a useful alternative to the Bank of Mum and Dad for those people struggling to get deposits together and take a step on the housing ladder,” Shapps wrote.

“Due to be launched this Spring, under this new industry-led scheme house builders and we in Government will provide security for the loan, enabling homebuyers to secure mortgages on newly-built homes with just a five per cent deposit”

The headlines surrounding the news suggest that this is a big blow for the government’s plans but as a spokesman for the Department for Communities and Local Government pointed out, the average house purchase takes around six months to go through and a significant proportion of reservations aren’t shown in those initial figures.

“As the Home Builders Federation have recently reported, 1,500 reservations have been made through NewBuy and at least 25,000 additional new homes will be built as a direct result of the scheme,” the Spokesman said.

The Home Builders Federation are also standing behind the scheme and they indicate greater interest from lenders and property developers since the launch back in March. At that stage, only seven builders and four lenders had expressed an interest but this has risen to six lenders along with thirty developers.

“People weren’t aware of it – it’s a completely new scheme,” said Steve Turner, spokesman for the HBF.

“Take-up in the past few weeks has markedly increased, to about 100 reservations a week.” He said take-up had been similar to the previous government’s FirstBuy scheme, which was regarded as a success.”

Predictably however, the opposition government has criticised the initiative in the wake of the new figures and is suggesting that the planned target for 100,000 purchasers by 2015 is way off course.

“The government needs to drop the hype and change course by implementing a real plan for homes, jobs and growth,” said Shadow Housing Minister Jack Dromey.

“If it fails to do so, at this rate, it will take 200 years for NewBuy to help 100,000 homebuyers buy their own home.”

Whoever is right or wrong in this argument, it seems that it’s far too soon to be judging the New Buy Scheme after just four months.

Government Answers Call for New Build Measures

Last week, the Home Builders Federation (HBF) announced a welcome to new housing minister Mark Prisk while urging the MP for Hertford and Stortford to act quickly to protect the interests of domestic property building firms across the country.

Meanwhile, David Cameron and Nick Clegg have responded to calls within the industry to aid housing growth by announcing new proposals which will inject cash as well as addressing the question of restrictive planning laws.

“We hope he (Mark Prisk) will offer some radical ideas to transform the current housing and planning systems and tackle the housing crisis, providing economic growth and jobs, and strengthening communities across the country,” said Stewart Baseley of the HBF last week.

In the separate announcement, the UK’s coalition government claim that their brand new package of measures will create up to 70,000 new properties including a significant proportion of affordable new homes for first time buyers.

The proposals will also aim to create around 140,000 jobs in the sector as the government aims to inject £40bn into infrastructure projects. It will also look to reduce the obstacles put in the way of new homes and will allow developers to sit down with local councils and re-negotiate agreements on affordable homes.

Speaking on daytime television Mr Cameron said,

“Frankly we had a situation where the lenders did not want to lend so the builders could not build and the buyers could not buy. We are talking today about 140,000 jobs provided by building an extra 70,000 houses.”

Nick Clegg added that the scheme would simply make it cheaper for developers to build.

“If you are finding it too expensive to raise money yourself to put shovels in the ground to employ on construction sites and build homes for private rent and to build affordable homes we are going to make it cheaper for you to do so,” he said.

Predictably however, Labour’s opposition has criticised the government’s actions on new homebuilding as a whole.

“We need to get Britain building again, but the government has slashed the housing budget and the number of affordable homes being built is down by 68%,” said Rachel Reeves, shadow chief secretary to the Treasury.

“The fundamental problem is not the planning system or Section 106 agreements for much-needed affordable housing, it is the lack of confidence and demand in the economy, slashed public investment and the government’s failing economic plan.”

However, the Prime Minister is adamant that this shows a clear commitment from the government to address any problems and to meet the demand for new housing.

“The measures announced today show this government is serious about rolling its sleeves up and doing all it can to kickstart the economy. Some of the proposals are controversial; others have been a long time in coming. But along with our housing strategy, they provide a comprehensive plan to unleash one of the biggest home building programmes this country has seen in a generation,” Mr Cameron concluded.

Interest in New Homes Soars

New homes have been firmly in the news of late with government schemes announced that attempt to encourage construction companies and local authorities to build the houses that will meet demand. Now, as we enter the second quarter of 2012, leading house builder Barratt Homes have announced that they have experienced their busiest start to a year for five years.

The increase in activity began with a vastly increased number of searches on the company’s website back in January and this has subsequently been supported by a rise in visits to new sites and reservations on new properties.

As a result, Barratt claim that some sites are selling homes at twice the national average. The company’s figures have also been backed up by Right Move, who confirm a 27% rise in property searches since the start of the year.

Barratt believe that potential buyers are making their move as they become aware that home ownership is more cost effective than renting.

“We believe that one of the key factors is that savvy customers have worked out it’s now cheaper to buy than rent,” said Lisa Preston of Barratt West Midlands.

“We simply can’t believe how busy we are especially at a time when all you hear in the news is doom and gloom. It just feels like the people of Burton have decided to get on with their lives.”

Lisa Preston also added that she believes people are becoming aware that there may never be a more affordable time to buy their own property.

“In recent years many people have had to put their lives on hold but it seems that they are not prepared to wait any longer,” she added.

“Home buyers have also woken up to the fact that with interest rates low and house prices still some way below their peak, buying is more affordable now than many believe.”

Staying in the Midlands, home builder David Wilson have announced the development of six new sites across Leicestershire as they also start to meet an increase in demand.

“The Prime Minister has said again and again that one of the best ways to boost economic growth and get people working is through building more homes,” said Philip Lacey, David Wilson’s sales director for the area.

Mr Lacey also went on to confirm that over 1,500 jobs would be created for local people as a result.

“In addition to the local construction jobs created in building the new homes, the local people who move into the new housing will also spend their wages locally. This translates into a significant boost for local retailers at a time when concerns remain about the national financial picture. It’s exactly what this area needs,” he concluded.

In the midst of government announcements, the claims from these two home builders may just be tangible proof that the housing market, for new properties at least, may show a marked improvement in 2012.

Government on Track to Build 100,000 New Homes

If you are particularly after purchasing a new home then good news is on the horizon.  The Government is currently on track to build 100,000 new homes in the UK over the next 4 years, according to Housing Minister Grant Shapps.

Buying a home off-plan comes with a lot of benefits.  Firstly you get to be the first person to ever live in the house and you can see if well before it is built.  You can also usually choose various fittings such as carpets, the finish of kitchen units and the style of bathroom tiles.  Many housing developers are also making it easier for people to move into new homes by offering to pay deposits or stamp duty which can really be a lifeline to some first time buyers.

Mr Shapps said that he is “delighted” that Government departments are taking up the challenge to release more land with the space to build over 50,000 new homes, and that property experts will carry on working with departments to ensure “no stone is left unturned”.

At the same time, he also set a challenge for UK property firms to release as much land as possible and make it available for new homes.  A cabinet committee will carefully analyse each department’s plans to ensure every possible site is made available for house building.

Mr Shapps went on to explain that the new Community Right to Reclaim Land will assist communities with the improvement of their local area by arranging for disused publicly-owned land to be released for new developments.

He also claimed it will “revolutionise” the way local people, working alone or with their communities, will be able to come together to build the homes, shops and businesses the area needs.

“Ordinary people will have a simple system for making a case to use that land and improve their local area, with a promise they will now be listened to,” he added.

Architects Brand New Homes as “Shameful”

The Royal Institute of British Architects has referred to many new-build homes in the UK as “shameful shoe boxes” that are too small for family life.

RIBA has carried out its ‘Case for Space’ study of 3,418 three-bedroom properties in the UK and reported that the average three-bedroomed house is 8% smaller than the recommended minimum.  That lost space equates to the size of a single bedroom, according to RIBA – enough room for a single bed, bedside table, wardrobe, desk and chair.

Even worse, some three-bedroomed homes were found to be even smaller, with a shortfall of two double bedrooms or built using only 77% of the recommended minimum space.  Whilst there are currently no UK-wide ‘minimum space’ standards, RIBA’s research was conducted using the London Plan space standards based on the 96 sq m minimum currently laid out in the guidelines.

RIBA chief executive Harry Rich said that these new homes were causing some homeowners to live a lesser quality of life.  He said “Our homes should be places that enhance our lives and well-being,”

“However, as our new research confirms, thousands of cramped houses – shameful shoe box homes – are being churned out all over the country, depriving households of the space they need to live comfortably and cohesively.”

As a result of its findings, RIBA wants consumers to have access to better information from house builders and estate agents so they can see exactly what they are getting for their money.  Off-plan properties can be deceptive and RIBA would like all plans to include furniture and other fittings to give consumers a clearer picture.  Show-homes should also be furnished completely and present rooms as realistically as possible.

A spokesman said: “Under our planning reforms neighbourhoods will be able to design and vote on their own plans for the future of their areas, giving them the chance to exercise meaningful choice over the type and size of homes that are built, and giving developers the chance to benefit from a smoother process for getting planning permission by working with local people from the start.”