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Impact of the general election on the housing sector

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13/05/2015

Tipped as one of the biggest issues facing the country at the General Election, the housing sector will bring the Conservatives a number of challenges. Walker Morris reviews what the Conservative win might mean for the housing sector.

For several decades and through successive governments the supply of housing has failed to meet the demand of the housing sector needs. The lack of affordable housing was high on the agenda of all the political parties’ manifestos.

So what will the Conservative response be now that they are in power?

The Conservatives argue that they believe passionately in home ownership.  Their manifesto promised to build 200,000 starter homes exclusively for first-time buyers under 40, the extension of the Help to Buy Equity Loan scheme and the introduction of a new Help to Buy ISA for people saving for a deposit.  The Conservatives pledge that these initiatives, coupled with the creation of a Brownfield Fund to encourage house building on brownfield land and tighter restrictions on the development of Green Belt,  will double the number of first-time buyers and increase the availability of affordable housing.

Yet critics question whether in reality this will have the desired effect or simply continue to drive up house prices?  One of the key themes of their manifesto was the controversial policy to extend the Right to Buy policy to tenants in Housing Associations.  The scheme will allow an estimated 1.3 million families in housing association properties the opportunity to buy their property at a discount and is expected to be taken up by tens of thousands of housing association tenants a year and will be capped at just over £102,700 in London and £77,000 for the rest of England* (The Guardian 14 April 2015).

Local authorities will also be required to sell their valuable properties from their housing stock.  These most expensive properties will be sold once they become vacant and local authorities will be required to replace the properties on a one for one basis.

Critics argue that this policy will force local authorities to sell their best properties which will not only reduce their housing stock but leave the residual housing for the poor as a result.  This will be a particular challenge for those authorities with high house price wards – selling their most expensive properties could see the eradication of much needed affordable housing in those high value wards, where to date,social housing has been the only viable solution for some families.

Many housing associations and local authorities have voiced concerns that it will turn mixed-tenancy council housing into estates for the poor.  Similarly critics have questioned the return that local authorities would see for selling the properties versus the cost to buy and develop more properties and query whether the government estimates for the number of new homes expected to be built are realistic.

The proposed extension of the Right to Buy to Housing Associations will not be without its hurdles: some associations have already voiced their intention to challenge such a move as a breach of their Human Rights. Other considerations will include whether such a move could affect the charitable status of associations, and how it will affect their borrowing capacity and existing covenants.

We await details of how the Government will implement its policies and the legislative changes it proposes to implement it.

Brandon Lewis is continuing as the Minister for Housing and Planning at DCLG.

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