“Under the “starter homes” programme, originally announced a year ago, 200,000 first-time buyers will be able to purchase new houses or flats at a 20% discount.
The quid pro quo of this arrangement is that developers will be relieved of their obligations to provide affordable homes for rent, or having to pay for general local infrastructure such as roads, or indeed schools.”
Devon County Council’s senior councillors are being urged to gamble up to £30million on the rising property market to help make up for Government cuts.
They are also advised to put Barclays Bank back on its approved list of “counterparties for lending” , despite its recent downgrading in the light of new banking rules.
The ruling executive will next week consider a report recommending they sanction an investment in the Churches, Charities and Local Authorities) Property Fund (CCLA) instead of bank deposits.
The CCLA fund currently has investments of over £300 million, with over 100 local authority investors including Plymouth City Council and four Devon town councils.
A report to the cabinet meeting points out the “risk” that property value could go down and that with charges a 3% rise in the market would be required for the authority to break even.
“This means that any investment would need to be medium to long term, a minimum of 2-3 years” the report said.
“Capital growth would need to be around 3% per year to ensure that the capital redeemed at the end of the investment was at least equal to the initial amount
invested,” it added.
Finance officers at the council calculate that a £30 million investment “would have the potential to yield up to £1 million additional investment income in 2016/17 and 2017/18 to help offset the budget pressures facing the council”.
But it also represents “an increased risk of loss of capital in comparison to the use of term deposits with banks and building societies”.
Hard to see how this will help in East Devon – except that it will further benefit developers:
“In one of his central policies due to be unveiled in his closing speech, Cameron will say: “For years politicians have been talking about building what they call affordable homes but the phrase was deceptive. It basically means ones that were only available for rent. What people want are homes they can actually own.
“When a generation of hardworking 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 all of us. We need a national crusade to get houses built. That means banks lending, government releasing land and, yes, planning being reformed.”
In the key reform, ministers will change the definition of affordable housing to include not just properties for rent, but starter homes, as part of the government’s programme to build low-cost homes for first-time buyers so long as they are under 40 years old. It will mean developers will have fulfilled their obligations to a council if they build homes for purchase.
Under the scheme, houses must must be 20% below the market rent and capped at £450,000 inside London and £250,000 outside. …
… The scheme is likely to be popular with developers, who prefer building homes for purchase as they immediately receive income on the property’s sale, unlike a rented property that involves a much slower rental income stream spread over as long as 20 years..
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East Devon Watch 