Housing strategy in London to tackle demand/supply gap
Published: 16 April 2014 | Author: Bernard Clarke
While our main article in this issue looks at what the market experience outside London comprises, the Greater London Authority is in the process of updating the London Housing Strategy. This is likely to be finalised in June, and has plenty for the mortgage industry to consider.
The strategy is unsurprisingly focused mainly on supply. The declared target in the strategy of 42,000 homes per annum, with over a third being affordable, is welcome – if challenging. We have long endorsed the urgent need to tackle the supply/demand imbalance in London. Incentivising home-building will be a step in the right direction to get more Londoners into affordable home-ownership, as well as rented housing.
Changes outlined for the private rented sector, including having housing benefits paid directly to the landlord and the promotion of longer-term tenancies, could potentially improve stability and certainty for both landlords and tenants. We have been active participants in the debate on these issues.
The commitment to expand intermediate home-ownership as a mainstream tenure of choice will be a key area on which the CML will work with the GLA and providers to encourage greater understanding of differences between the various intermediate products, such as shared ownership and shared equity. We are currently developing two factsheets highlighting the key features and differences of these routes to ownership. These will be available shortly, and are intended to stimulate discussion and be a basis for further research on customer cost-benefits of these approaches.
We still hold reservations regarding the declaration of support for Right to Part Buy, a hybrid scheme of shared ownership and Right to Buy. We support the aspiration to increase choice, but the complexity of such a scheme may be confusing for customers and there is no existing lending system readily fit to cater for such an initiative. We have flagged our concerns on this matter in our consultation response and will continue to discuss it with the GLA.
London will continue to have its own challenges to tackle compared to the rest of the UK. The CML will continue to work with the GLA on these issues, in support of a housing finance framework that helps achieve the housing needs of Londoners.
Despite the particular challenges of the London market, an increasing number of first-time buyers are realising their aspirations to become home-owners, according to our most recent analysis of lending in the Capital.
First-time buyers took out 13,400 loans – worth £3bn – for house purchase in London in the fourth quarter of 2013, which was up a third in volume in comparison to the fourth quarter of 2012. First-time buyers now account for 56% of London house purchase loans compared to 45% in the UK overall.