Government to discount new homes for the wealthy

THE GOVERNMENT has begun the New Year by announcing the 30 areas where it is going to build the first wave of its “starter homes”. The homes will be put on sale to first time buyers aged between 23 and 40 – at a discount. The new scheme highlights how the Government is prepared to subsidise homeowners but not those who are renting in the public or private sectors.

The detail of the latest scheme (experts estimate around 180 new schemes to subsidise home owners have been introduced since the Tories first got back into office in 2010) is very slim. Housing Minister Gavin Barwell is trying to make good on David Cameron’s pledge to build 200,000 starter homes by 2020. However, today’s announcement only says that the first wave of homes will be built in 2017 – without revealing home many homes will be in the first wave.

Worse: Barwell has confirmed that although the starter homes are being described as “affordable homes for first time buyers”, those built in London will cost up to £450,000 each. A couple would require an income of some £100,000 per year (putting them in the higher rate tax bracket) to obtain a mortgage of around £400,000 if they were able to put down a deposit of £50,000 – and that’s presuming they have paid off their student loan. Homes outside London will not cost more than £250,000 – but that will severely restrict where they can be built. Although homes in London are the most expensive in the UK, there are several parts of the country where modest homes cost more than £250,000. Developers will not want to see house building which could put pressure on those prices to come down.

Gavin Barwell insisted that, “This Government is committed to building starter homes to help young first-time buyers get on the housing ladder.”

Labour’s housing spokesperson John Healy cast doubt on the whole starter homes idea, saying, “Ministers launched them in 2014, but will only start to build the first in 2017, promised they’d be affordable for young people when they’ll cost up to £450,000, and pledged to build 200,000 by 2020 but no one now believes that’s possible.”

Roger Harding, Director of Communications at the housing charity Shelter, also cast doubt on the scheme, saying, “Efforts to build more homes are welcome, but these starter homes are only likely to benefit people who are better off and already close to buying.”

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