New Build and Affordable Housing – what’s coming next?

We’re all aware of an acute shortage of housing in the UK, which has led to high levels of house price inflation in recent years. Estimates have put the number of new houses needed in England at 345,000 per year to tackle the backlog[1]. In 2019/2020 housing stock increased by 244,000 so clearly we have a lot to do[2].

There are a number of government initiatives coming in 2021 that will be supported by Leeds Building Society.

Shared Ownership

Shared Ownership has been the mainstay of government backed home ownership for first time buyers (FTB) in the UK for 40 years. Leeds Building Society has been a major supporter of the scheme for many years, being recognised as a market leader[3] and voted Best Shared Ownership Mortgage Lender by the What Mortgage Awards six years running from 2016 to 2021.

The Government has pledged a further £12.2bn over five years for affordable housing, providing up to 180,000 new homes and announced improvements to the Shared Ownership scheme to make it easier to access and provide more security and flexibility for first time buyers.

What do the improvements mean?

• Gradual Staircasing to be introduced, allowing owners to purchase a further share of their property in 1% increments with heavily reduced fees
• 10 year initial period where leaseholders will receive support for essential building repairs from housing associations or landlords
• More control to be given to leaseholders when they come to sell their homes, ending the eight week period where the freeholder has exclusive rights to find a buyer
• Introduction of 999 year leases on new build properties with zero ground rent

Help to Buy

Help to Buy was introduced in 2013 and has enabled 270,000 houses to be purchased, 83% of which were by FTBs[4]. The original scheme has now been replaced by a new version that runs until April 2023.

How is the new scheme different?

• FTBs can borrow up to 20% (40% in London) of the cost of a new home from the Government/Homes England. The buyer must pay a minimum of 5% deposit from their own funds.
• Regional price caps to be introduced, set at 1.5x the average FTB house price in each region to keep prices closer to the average and reduce the amount FTBs need to borrow
• Builders must comply with more stringent conditions to drive quality and follow a New Homes Ombudsman scheme.

Future Developments

First Homes

A new scheme to provide FTBs with a 30% discount against market value, similar to existing Discounted Market Sale schemes. Available for homes costing £250,000 (£450,000 in London) or under, the Government is currently working through the pilot stages.

Permitted developments

Robert Jenrick, Secretary of State for Housing, Communities and Local Government, also announced an increase in permitted developments which will potentially remove the requirement for full planning permission on some developments.

Green Mortgages

The green mortgage market has been evolving quickly this year, with more and more products being launched each week as lenders look to support the Government’s 2050 net zero carbon emissions ambition. We’re looking to launch our own green product range, so keep a look out for more information on this over the coming months.

If you’d like to see what affordable housing mortgage products we offer click here.

This website is for use by FCA authorised intermediaries only. If you are a customer please click here to visit our customer website.

[1] Ministry of Housing, Communities & Local Government. Statistical release. Housing. Housing supply: indicators of new supply, England: July to September 2020.

[2] Ministry of Housing, Communities & Local Government. Statistical release. Housing. Housing supply: indicators of new supply, England: July to September 2020.

[3] Based on YTD illustrations, figures taken up to 13/07/2021

[4] www.helptobuy.gov.uk