Government’s housing vision
Ambitious targets aimed at making sure everyone has a place to live in the future

The government’s green paper on housing issued recently unveiled plans to build 3m additional new homes by 2020, as well as other initiatives to help first-time buyers and mortgage borrowers.

As part of the plans, the government will step up pressure on local councils to take control of unused empty properties. Under the existing Empty Dwelling Management Orders (EDMOs) legislation, councils are able to take over management of some residential properties that have been empty for more than six months.

This does not necessarily apply to second homes, as the council needs to prove that it is in the public interest to take over the property. In effect, this means it only applies to dilapidated or long-term unused houses that are falling into disrepair.

The government estimates there are currently more than 500,000 empty privately- owned residential properties in England, half of which have been out of use for longer than six months. This equates to an average lost rental figure that owners could be missing of approximately £8,000 a year.

The government estimates that nearly 150,000 properties have been empty for two years or more, and claims there is also evidence of homes being bought as a capital investment and then left empty on a ‘Buy to Leave’ rather than ‘Buy to Let’ basis.

The government says councils will be expected to do more to bring these back into use, including using their powers of seizure more aggressively.
The green paper also looked at ways of helping first-time buyers into affordable social and shared equity housing.

Shared equity schemes will, in particular, now be a major focus for the government. This is where buyers take a loan for a deposit from either private sector lenders or the government to get on the housing ladder. The loans are interest free but need to be paid back when the house is sold.

The government has set a target of 25,000 shared equity or shared ownership homes to be funded by the Housing Corporation, and it has launched a 17.5 per cent government equity loan that can be used with any lender.

The paper also confirms government plans to help lenders finance mortgages, including more affordable longer-term fixed-rate mortgages.

There is also a plan for an initiative to establish a covered bonds regime in the UK to help finance mortgages, which will give lenders access to borrowing in the £1,500bn European covered bonds market.

The problem for lenders offering longer-term fixed- rate mortgages has been that they face the risk that borrowers may repay early, which means that they have had to charge borrowers a premium on their mortgage rate to help cover potential costs. The review will examine other ways for lenders to manage this risk, for example, by purchasing derivatives.

The government will also look at whether house buyers themselves can use such alternative financing instruments.

These plans are part of a wider package to meet the government’s new housing target of 240,000 new homes each year by 2016 – up from its previous target of 200,000 new homes.

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Article date: 09.07