Cameron pledges 200,000 starter homes for first-time buyers
Prime minister David Cameron is to announce today that 200,000 low-cost starter homes will be built for first-time buyers by 2020, a move he believes will help put an end to ‘Generation Rent’.
Councils can currently force builders to earmark a certain proportion of properties in a new-build housing development as affordable homes for rent.
But the government’s new policy will see house-builders forced to offer starter homes at discounted prices for buyers under 40 years of age, which Cameron believes will turn Britain’s young people from “Generation Rent to Generation Buy”.
The new Starter Homes will be discounted by up to 20% below market rates and apply to properties worth up to £250,000, rising to £450,000 in London. People who buy one will not be able to sell it for a quick profit.
Cameron is to state at the Conservative Party Conference: "When a generation of hard-working men and women in their 20s and 30s are waking up each morning in their childhood bedrooms – that should be a wake-up call for us.
“For years, politicians have been talking about building what they call ‘affordable homes’ – but the phrase was deceptive. It basically meant homes that were only available to rent. What people want are homes they can actually own.
“Those old rules which said to developers: you can build on this site, but only if you build affordable homes for rent. We’re replacing them with new rule. You can build here, and those affordable homes can be available to buy.”
The average monthly rent in the UK stands at £803, according to the latest Buy-to-Let Index from Your Move and Reeds Rains. This rises to £1,278 a month in the UK – making it difficult for people in private rentals to save a deposit to purchase a home.
Dan Wilson Craw, policy manager at campaign group Generation Rent, said the Starter Homes policy would do nothing to assist those people on low incomes struggling to afford rental properties, let alone a new-build home.
"Under the prime minister's plans, only 200,000 relatively well-off households will get to buy a home,” he said. “But there are five million households who will remain stuck in private rented housing, paying out half of their income to their landlord."
“If David Cameron prioritised building social housing instead, he would finally begin to fix the affordability crisis. With lower demand for private rentals, rents would fall, and private renters could start saving for that home of their own.”
The catch-all term applied to investors who buy properties with the sole intention of letting them to tenants rather than living in them themselves, with the proceeds from the let usually used for the repayment of the mortgage. Buy-to-let investors have to take out specialised mortgages that carry higher interest rates and require a much bigger deposit than a standard mortgage. Other expenditure can include legal fees, income tax (on the rental profits you make), capital gains tax (if you sell the property) and “void” periods when the property is unlet.