With UK housing prices so high, many young house hunters are priced out of the market. According to Reuters, house prices in the UK have risen nearly 10% in the last year, and the price of property in London exceeds the national average by some margin. However, the UK government has made affordable housing a priority, and Prime Minister David Cameron has specifically highlighted the need to ensure that young home buyers are not “locked out of home ownership”.
This is evidenced by the recent announcement of an ambitious undertaking; the construction of 100,000 “starter” homes. Once completed, these new properties will be sold at a discount to encourage young home buyers to take their first step onto the property ladder.
Affordable housing is a key election issue
It's clear from the comments made by both the Prime Minister David Cameron and opposition leader Ed Miliband that the UK housing market will be a key issue of contention at the next election. Miliband pledged to double the number of first-time home buyers by building enough houses to meet demand by 2025. Cameron responded by pledging to build 100,000 new homes and to offer them at a 20% discount to first-time home buyers under the age of 40.
This 20% discount is made possible by:
- Exempting the properties from certain taxes, as well as the zero-carbon homes standard.
- Building the homes on brownfield land, which is the term for land that was previously being used for industrial or commercial purposes, but has now been made available for property development.
The use of brownfield land is controversial, as is the exemption of the properties from certain obligations, such as the zero-carbon standard and the market legislation that requires property developers to ensure that a certain proportion of the housing they develop are affordable. However, these measures are instrumental in bringing about necessary cost-savings.
These measures, combined with the government's help to buy scheme (which will be applicable to the new homes being built and which has already played a significant role in promoting activity in the property market - 82% of whom were first-time home buyers), ensure that the new developments will be extremely affordable, providing a viable option for first-time home buyers.
The new initiative will also encourage more property development, a more effective long-term solution to the housing shortage and something which mortgage-oriented policies such as the help to buy scheme have been criticised for failing to do.
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