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Failure to build enough houses remains greatest obstacle to overcoming housing crisis

In the last six months of the pandemic, our homes have become a main focus. Their function as a place where we rest has moved to also being our place of work. This new focus has raised the question of poor housing and the continued lack of affordable housing again.

Planning Blueprint with APPROVED stamp - Shared Ownership boosting the housing market

Since the housing crisis in 2008, many schemes have come into force to boost the flagging housing market. However, the most obvious problem remains unchallenged. The Government could turn its attention to combating the dominance of the few large housebuilders over the supply available. Rather than continually trying to make it easier for people to buy the few houses available.

According to Liam Halligan, writing in The Sunday Telegraph, “Our top 10 developers account for over 70% of all supply”. This means that they effectively hold all the cards.  They have the financial means with which to purchase large areas of land and sit on it before deciding to develop it. This effectively creates a demand for their product resulting in an increased market value.

The number of building permissions granted by local authorities has increased, however there is a long way to go to reach the Government’s target of building 300,000 homes a year. Due to this lack of competition, smaller builders are unable to finance the ever-increasing land prices, and if they do, having to build quickly enough to enable cash flow for the next project.

Planning Permission versus Completions in the UK - 2011/12-2017/18

SOURCE: GLENIGAN

According to research carried out by Shelter, “There has been growing discussion about the build out rates* of major developers, and the extent to which there is a gap between planning permissions and completion…housebuilders’ approach to the land market is a consequence of the current system and they will only build homes at the rate at which they can sell them for a profit.”

Until the dominance of the top 10 housebuilders is addressed the lack of housing supply, and subsequent problems will continue.

 

 

For further information please contact Ed or Kelly on Tel: 01284 365345 or email ed@granitebw.co.uk / kelly@granitebw.co.uk.

*number of houses built per annum

Threshold for shared ownership reduced from April 2021 to 10%

The first time buyer market could see a boost following the Government’s latest announcement. It’s plan is to reduce the initial share of a home that can be bought using the Shared Ownership Scheme. The government has reduced it from 25% to 10% and this will be put in place from April 2021.  This is very good news for young buyers!

There are many reasons why first time buyers are struggling to access the property ladder. They are finding it harder than ever to secure a purchase due to:

  • Mortgage lenders increasingly reducing their low deposit mortgages
  • A lack of savings to dip into
  • Job uncertainty

The Shared Ownership Scheme

House Puzzle - Shared Ownership Scheme UKThis is currently available to households with an income of less than £80,000 (£90,000 in London). They are able to purchase between 25%-75% of the value of the property and rent the remainder. Typically these are new homes or properties owned by housing associations.  The owner is then able to purchase further shares in the house at 5% or 10% increments, known as staircasing.

What are the changes under the new terms?

  • The deposit will change to 10% of the purchase price
  • You can purchase increments at 1%, increasingly affordability
  • Increase the share owned with less limits on staircasing within the leases
  • Landlords will also be responsible for the repair and maintenance of the building in the first ten years under this change to the scheme.

Shared Ownership House Building in UKChief Executive of Reallymoving.com, Rob Houghton, commented on the change saying: “just over 10% of First Time Buyers are currently using Shared Ownership. Competition for these properties is already very strong and making the scheme more accessible to those with small deposits will undoubtedly boost demand further.”

The new version of Shared Ownership aims to help those who are unable to access the Help to Buy Scheme. The scheme, due to end in 2023, may become more difficult to access once regional caps are introduced in Spring 2021.

In order for this to make an impact, the Government must invest the £12.2bn they have pledged to build affordable homes.  The government has promised an investment of  £11.5bn in the form of an Affordable Homes Programme between 2021 and 2026. This should equate to an estimated 180,000 new homes across the UK.

“Today’s announcement represents the highest single funding commitment to affordable housing in a decade and is part of our comprehensive plans to build back better,” said Housing Secretary Robert Jenrick.

 

For further information please contact Ed or Kelly on Tel: 01284 365345 or email ed@granitebw.co.uk / kelly@granitebw.co.uk.

A Guide to Retrospective & Replacement Building Warranty Cover

 

Why do I need retrospective cover?

A Retrospective Building Warranty is essential if you intend to Sell or Refinance a property that has been built in the last 10 years and does not have a recognised 10 year structural warranty in place.

Lenders will not agree to provide funds without a completed housing warranty in place that covers the structure of the property or excludes the owner/lender from potential future liability for structural issues. Without a warranty it will be almost impossible for a buyer to obtain a mortgage.

The Warranty can be arranged by either the owner or purchaser of the property through Granite Building Warranties.

 

How long is the policy?

Cover is provided for the balance of the 10 year period from the date of Building Regulation Sign Off.

 

Is the policy transferable?

Retrospective structural defects warranties are completely transferrable to any new owners of the property over a 10-year period, as the certificate is attached to the home rather than the person who takes out the construction insurance.

 

What does the policy cover?

The cover protects the property in the event of a structural defect or latent defect as a result of a defect in the design, workmanship or construction of the home.

 

The process and timing

Prior to the insurance being issued, a nonintrusive structural survey will be undertaken by the insurance company.

The surveyor will assess the design and physical condition of the building, to ensure its structural integrity and compliance with the warranty requirements. They will also require copies of all the relevant certificates (Building Regulation Sign Off, EPC, Gas and Electric certificates etc). If the survey raises any problems, then minor remedial works may be required prior to cover being offered, (confirmed usually by photographs) or existing issues can be excluded from the policy.

A Certificate of Insurance will then be issued covering the balance of the 10-year period from completion of the build.

From instruction to proceed the process can take between 5 – 15 working days.

 

Can I replace an existing invalid warranty cover if necessary?

A replacement or retrospective warranty can also be used to replace a warranty that has become invalid due, for example, to the financial failure of the original insurer. If this should happen and you are an owner of a property in this situation, it will be a requirement of your mortgage lender that the invalid warranty must be replaced with another structural warranty policy for the remainder of the term (please check with your mortgage company as a matter of urgency). In this situation Granite can assist with the new policy and the process will be the same as above.

 

Granite Building Warranties are Specialists within the Retrospective and Replacement Warranty Market, dealing with these types of policies on a regular basis and we will be happy to help you with any questions you may have. Contact us today for your no-obligation Building Warranty quote.

Please contact Ed or Kelly on Tel: 01284 365345 or email ed@granitebw.co.uk / kelly@granitebw.co.uk.

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