“Land values funding row set to throw Axminster masterplan and relief road plans into chaos”

As reported by Owl a week ago:
https://eastdevonwatch.org/2019/11/29/axminster-master-plan-back-to-the-drawing-board-but-dont-upset-the-developers/

“A row over land values is set to scupper a masterplan that would see more than 800 new homes and the long-awaited relief road for Axminster built.

The Axminster North East Urban Extension masterplan for 850 homes was adopted in January, and also includes employment land, open spaces and community facilities.

It also included the £16.7m north-south relief road that aims to end the severe congestion, pollution and HGVs having to travel on the existing road that runs through the centre of the town.

East Devon District Council had successfully bid for a £10m Homes England Housing Infrastructure Funding (HIF) grant that would be used to help fund the delivery of the crucial new relief road, only for the government agency to change their mind and turn the grant into a loan. …

Outlining the situation in his report, Mr Freeman says that the land owners have been contacted but are unwilling to reduce their expectations.

The Crown Estate who own their land outright advised that the value attributed to their land is fixed by what they actually paid and cannot therefore be renegotiated, he said, adding the land owners whose land is optioned to Persimmon Homes were not willing to entertain this option, stating that if they could not realise their expected values they would simply continue to farm the land and await a more attractive offer in the future. …”

https://www.devonlive.com/news/devon-news/land-values-funding-row-set-3608294

Retirement flats – the big con

Tens of thousands of families have seen their inheritances decimated after elderly relatives paid inflated prices for new retirement homes that have collapsed in value, an investigation by The Times has found. Prices of retirement flats in developments built by some of Britain’s biggest housebuilders have plummeted by up to 90 per cent in the face of costly annual management charges and ground rents.

Analysis of Land Registry data suggests that £3 billion could have been wiped from the value of retirement homes built between 2001 and 2015. In one case, a flat bought for £197,000 in 2009 from builder McCarthy & Stone, a FTSE 250 company, was sold for only £26,000six years later. The owner, Miriam Savage, was paying £8,200 a year in service charges and ground rent to the managing agent.

The losses often become apparent to families only when their loved ones die and they try to sell their home. There are 150,000 retirement flats in the UK. They don’t have full-time nurses but most have communal areas and features to help residents live independently. There is often 24-hour telephone support or wardens on site.

The properties are sold as leaseholds with the freeholds bought by the highest bidder. The freeholder collects an annual ground rent and appoints an agent to run the development. These companies have been accused of levying excessive fees and charges and leaving facilities to fall into disrepair.

Sebastian O’Kelly, of betterretirementhousing.com, said: “These flats routinely plummet in value and the reason is the leasehold system. The freeholder and property manager still get their ground rent and service fees irrespective of price. It’s deplorable that families are pouring money into these purchases, often in desperation, only to see their value evaporate.”

Retirement home builders say the value of the properties is not just financial. They say they reduce loneliness and the burden of maintenance and increase safety and security. McCarthy & Stone points out that since 2010 it has not allowed outside companies to manage its sites and this is protecting values.

Some families have concerns about how properties are sold. One complained that a 88-year-old relative was sold a flat while her daughter was on holiday. When the woman died, the flat wouldn’t sell. Land Registry data shows the average loss of value for flats in the block is £74,000.

The Times looked at nearly 500 retirement flats in 15 developments built between 2001 and 2015. Almost 80 per cent of the homes sold since their first purchase had fallen in value with an average loss of £38,846. The analysis suggests that flats built since 2010 have fared better with only 37 per cent experiencing losses. But one McCarthy & Stone flat built in 2015 lost £45,000 in value when it was sold this year. In the past four years McCarthy & Stone has made profits of £383 million.

Mr O’Kelly said: “The situation may be improving as builders move to being service providers but these companies successfully lobbied government to retain ground rents on retirement sites, which doesn’t encourage the belief they have a long-term interest.”

This week Churchill Retirement Homes donated £150,000 to the Tories. The company is run by Spencer and Clinton McCarthy, the sons of John McCarthy, the co-founder of McCarthy & Stone. There is no suggestion that the donation was linked to the decision to exempt retirement home providers from a ban on ground rents. Spencer and Clinton McCarthy have been Tory supporters for ten years.

The industry says the sale of freeholds funds communal areas and without this system flats would cost more.

Sources at McCarthy & Stone insist it is a different company to the one that developed homes pre-2010. FirstPort is responsible for maintaining the developments built before 2010. It said that nine out of 10 customers say its properties improve their quality of life. It added: “Independent research by the Elderly Accommodation Counsel in 2019 found that new retirement properties typically increase in value. The vast majority of our managed properties increase in price on resale and they are more than just places to live.”

“The billionaire and the 219 tiny flats: a new low for rabbit-hutch Britain?”

“Campaigners have piled in to criticise plans drawn up by a billionaire property tycoon to cram more than 200 tiny flats into an office building in north London. They describe it as a “human warehouse” that would be filled with people living in “cramped single-occupancy shoeboxes” like “rabbits in hutches”.

Amid claims that some of the planned flats would be as small as 15 sq metres – that’s less than 13ft by 13ft for residents’ entire living space – some locals say the proposal is one of the most shocking examples yet of the phenomenon known as office-to-residential conversion. A typical Premier Inn hotel room is 21 sq metres, while national space standards state that the minimum floor area for a new one-bedroom one-person home is 37 sq metres.

It was 10 years ago that, while London mayor, Boris Johnson pledged an end to “hobbit” homes in the capital, but examples of rabbit-hutch developments keep coming, and one leading architect told Guardian Money: “We’re heading towards the so-called ‘coffin homes’ in Hong Kong.” …”

https://www.theguardian.com/money/2019/nov/23/the-billionaire-and-the-219-tiny-flats-a-new-low-for-rabbit-hutch-britain?CMP=Share_iOSApp_Other

More Tory fake news – this time on housing policy

The Sun has this headline:

“Labour in La La Land

Jeremy Corbyn will force Brits to sell land at a fraction of the price so he can go on huge housebuilding drive’

https://www.thesun.co.uk/news/10389467/corbyn-seize-property-housebuilding-drive/

The reality:

Labour’s plan is for land to be sold to councils and developers at its value BEFORE planning permission can be applied for rather than as, at present, being sold AFTER planning permission has been granted.

That won’t please East Devon Green Party candidate Henry Gent, who currently stands to make millions of pounds on the option he has given to Persimmon to build hundreds of houses on his farm land.

If Corbyn gets his way, he would get only the agricultural value of the land – making it significantly cheaper to build houses.

They published their ideas in June 2019:

https://labour.org.uk/wp-content/uploads/2019/06/12081_19-Land-for-the-Many.pdf

Kicked-out Tory Oliver Letwin understood the problem, but stopped short of offering a solution:

“Under the 1961 Land Compensation Act, councils are not permitted to buy agricultural land at its current value; instead they must pay a speculative “hope value”, based on the value of the land with permission to develop the site. That can easily make land more than 100 times more expensive than its actual worth. In his review of build-out rates (the report about the problem of land-banking that concluded that land-banking wasn’t a problem…), Oliver Letwin suggested that the residual land value of large sites should be capped at about 10 times their existing use value. Clearly better than paying 100 times the value – but does it go far enough?”

https://www.bdonline.co.uk/opinion/its-not-just-labour-thats-getting-behind-a-land-value-tax-/5099426.article

So this is both fake news and OLD news!

“Housebuilding data shows dearth of homes for affordable renting”

“The number of new homes classed as social housing and available at the cheapest rents from councils remained historically low at a mere 6,287, the second-lowest level in peacetime since council house building began in earnest in 1921.

The shortfall in new affordable homes is likely to fuel householders’ reliance on the private rental market. New research also published on Wednesday showed such housing is almost completely unaffordable in many areas for people who rely on housing benefit, which has been frozen since 2016.

In a third of areas of England fewer than 10% of homes are now affordable to welfare recipients, according to a study by the Chartered Institute of Housing and the homelessness charity Crisis. That meant increasing numbers of people were being pushed into homelessness or forced to live in emergency or temporary accommodation, the charity said. …”

https://www.theguardian.com/society/2019/nov/20/housebuilding-data-shows-dearth-of-homes-for-affordable-renting?CMP=Share_iOSApp_Other

Record number of adults living with parents

“Record numbers of young adults in their 20s and 30s are living with their parents, according to official figures, with critics blaming soaring house prices and rents.

The Office for National Statistics (ONS) said that over the last two decades, there has been a 46% increase in the number of young people aged 20-34 living with their parents. Over the same period, average house prices have tripled from about £97,000 to £288,000.

In total, 1.1 million more young men and women are now living at home, with the number increasing from 2.4 million in 1999 to 3.5 million in 2019. …”

https://www.theguardian.com/uk-news/2019/nov/15/record-numbers-of-young-adults-in-uk-living-with-parents?CMP=Share_iOSApp_Other

“None of pledged [200,000] starter homes built, says watchdog”

ANSWER: THERE ISN’T ONE!

The comments by developers at the end of this post, in BOLD, defy comment!

“A government plan to create 200,000 new homes in England for first-time buyers has resulted in no homes being built, the National Audit Office has found.

Announced in 2014, “starter homes” were meant to be aimed at those under the age of 40 and sold at a 20% discount.

But legislation to take the project forward was never passed.
Labour called the policy a total failure, but the government said it had a “great track record” for house building.
Former prime minister David Cameron committed to the scheme in the 2015 Conservative Party manifesto as a way of tackling the affordable housing crisis.

The project was also supposed to support the wider growth and regeneration of local areas, and some town centres.

The homes were meant to be built across the country by the end of the decade and more than £2bn was set aside for the first tranche of 60,000 dwellings.

According to the National Audit Office (NAO), between 2015-16 and 2017-18, the Ministry of Housing, Communities and Local Government (MHCLG) spent almost £174m on acquiring and preparing sites originally intended for building starter homes.

These were in places such as Plymouth, Bury, Basildon, Stockport, Bridgwater, Cinderford and Bristol.

But the spending watchdog said the sites were all now being used for housing more generally, only some of which was affordable.

‘Dashed expectations’

It said the scheme had faltered because the necessary legislation and planning guidance had never been put through Parliament, despite expectations it would happen in 2019.

As a result, even new homes conforming to the intended specifications cannot be marketed as starter homes, which has made getting developers on board challenging.

The NAO said the government also no longer had a budget dedicated to the starter homes project. …

… David O’Leary, policy director at Home Builders Federation, said that even though starter homes had not got off the ground, the scheme had not been a total failure.
He said the engagement it had generated between local government, builders, mortgage lenders and valuers was positive.

“The difficulty in creating a workable set of rules demonstrates the importance of ensuring that proper consideration is given to the practical implementation of interventions and their market impacts as early as possible.”

https://www.bbc.co.uk/news/business-50296672