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How the housing crisis could be solved – Legal and General

by: Craig Hall, new build manager, Legal & General Mortgage Club
  • 29/11/2016
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How the housing crisis could be solved – Legal and General
With Theresa May’s promise to tackle the housing crisis gaining traction in the Autumn Statement, the government has set out a clear plan to ensure work is underway in addressing the gap between housing supply and demand.

It’s now time for words to be met with action. Government, housebuilders and lenders must all work together to create an environment that supports those looking to buy new build.

Supporting all tenures

The commitment to build thousands of homes is to be welcomed, but housing policy should also be targeted to address our most vulnerable.

While a relaxation of restrictions on grants to allow a wider range of housing types is to be welcomed, we need to go further, tackling the shortage of retirement ready homes which comprise just 2% of housing stock. A failure to do so would make it even harder for 3.3m over-55s to downsize and free up housing for growing families.

Nearly four decades of Right to Buy has also dried up existing social housing. Council-owned properties bought by their tenants have not been replaced in similar numbers, meaning the waiting times for social housing have only increased.

Government must be an enabler in these sectors, incentivising investment and housebuilders to support projects that house Britain’s most vulnerable.

Innovate to succeed

Support for new, innovative construction methods is also vital if the government is to meet its housing targets.

Offsite modular homes are becoming an increasingly viable option, speeding up construction times and making more efficient use of labour and material. These homes could be the answer to rapidly increase construction and affordability in the market. At Legal & General, we are proud to be developing our modular housing initiative, and we welcome the government’s support of these new construction methods with the £3bn housebuilding fund.

Growing market support

However, it is not the sole responsibility of the government to get our housing market on the move. Lenders also have a crucial role to play.

Since the launch of Legal & General Mortgage Club’s new build proposition in January 2014, we have seen the market expand from a reliance on just two lenders to a wide variety. 2016 has also seen more lenders build and expand their new build offerings, and we will continue to work with our lender partners, helping to expand and improve their propositions.

However, there is more to be done. For a start, there must be more parity in LTV rates to bring ratios in line with other residential mortgages. The market must also look to support Discounted Marketing Sale properties that provide homes in the communities for those on lower incomes and for local people. Too few lenders provide mortgages for these schemes, while some housebuilders remain concerned about the impact on their private sales. The industry must work closely with government to support the construction of starter homes; increasing the number of mortgages available for these schemes and helping more people onto the housing ladder.

The fourth tenure

Finally, shared ownership has become an ever more popular option for first-time buyers and it’s great to see lenders signing up to the Help to Buy Shared Ownership scheme. However, we want to see more lenders entering this market.

Lenders must look to back the ‘fourth housing tenure’, working with housing associations to remove any preconceived fears about shared ownership. It’s with this support that shared ownership could increase to circa 30,000 new homes per annum by 2020, from a current figure of around 10,000 a year.

With the government clearly pressing ahead to increase housing supply, the foundations for a housebuilding revolution have been laid. It is now up to the mortgage market and housebuilders to do their part and create a favourable environment that supports prospective homeowners, and those ‘just about managing’ onto the ladder.

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