The Chancellor, in his Budget Speech on 21 March, reiterated the Government’s commitment to encouraging home ownership and announced a number of new measures intended both to support the housing market and those who want to get on or move up the housing ladder, and also to encourage the building of new homes now and in the future.
Support for home ownership
Since the financial crisis in 2007, the combination of lenders’ requirements for larger deposits coupled with falling house process has meant that many people have found themselves unable to get a mortgage, or to move from their existing homes. With a view to supporting these individuals, the Government has announced a new scheme – Help to Buy: equity loan – intended to increase the supply of low-deposit mortgages for credit-worthy households.
For a 3 year period beginning on 1 April 2013, the Government will therefore provide buyers of a new-build home with a loan worth up to 20 per cent of its value, repayable only when the home is sold. The maximum home value will be £600,000 and there will be no cap on the maximum income which a borrower can have. The scheme will be available to all buyers, not just first-time buyers.
In addition, a second scheme – the Help to Buy: mortgage guarantee – will be introduced which it is hoped will increase the availability of mortgages on new or existing properties for those with small deposits. The scheme will run for three years from January 2014, and will give a government guarantee to lenders who offer mortgages to borrowers with a deposit of between 5 per cent and 20 per cent. As with the Help to buy: equity loan scheme, it will be open to both first-time buyers and existing homeowners, have no income cap constraint, and be available on homes with a value of up to £600,000.
Support for new development
The £200 million Build to Rent fund announced in the Autumn Statement 2012 was significantly oversubscribed. The Chancellor today therefore announced that this fund will be expanded to £1 billion to support the development of more homes in England. The fund will provide equity or loan finance to support the development finance stage of building new homes for private rent.
In addition, the Chancellor announced reforms to the planning system intended to increase housing supply by ensuring that the planning regime is simple to access, supports growth and is responsive to housing need. The Government will, as a result, this summer publish significantly simplified and reduced planning guidance, and will make greater use of information on prices to ensure that sufficient land is allocated to meet housing and employment need; ask local areas to put in place bespoke pro-growth planning policies and delivery arrangements; consult on allowing further flexibilities between use classes to support change of use from certain agricultural and retail uses to residential use.
In addition, a public sector land auctions scheme is being progressed, plans will be announced in the Spring to shorten the time limits for bringing a planning judicial review, and the Government will also develop further measures to streamline the process for planning judicial reviews by summer 2013.