Now is a crucial turning point for affordable housing in the UK

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Last week the Royal Assent was given to the Housing and Planning Bill, passing what has been one of the most highly contested pieces of legislation ever into law. The Queen’s Speech this week reiterated the government’s commitment to housing in the UK – particularly home ownership.

The Housing and Planning Act reflects the extremely high level of demand for home ownership – 86% of people in the UK would rather own their own home than rent.

However, we are concerned that if the threshold for starter homes is set at 20% of a development, as proposed by the Government, this will be detrimental to the availability of other forms of affordable housing.

Delivery of affordable housing within development schemes nationally averages 25%. Inclusion of starter homes on every scheme at 20% would therefore mean that in many areas their affordable housing provision is almost entirely consumed by starter homes.

Some first-time buyers will be assisted by the starter homes proposals, which will enable them to receive a 20% discounted purchase. However, there will remain a large proportion of aspiring homeowners that will continue to be locked out of the market due to income and deposit requirements. Research from the Home Builders Federation report states that 73% of first-time buyers cite saving for a deposit as a main obstacle to home ownership.

Innovative low-cost home ownership products, such as our rent to buy model, uniquely overcome this barrier by enabling aspiring first-time buyers to save for a deposit through paying an affordable intermediate rent and receiving a gifted deposit of 10%.

If products like this were included within the starter homes requirement it would make a real difference to those aspiring home owners that cannot afford even a discounted purchase.

Complementary to the Government’s ambitions, this would ensure that the opportunity for home ownership is extended far more widely and local authorities are able to plan more inclusive mixed tenure communities.

With the Government turning its attention to the Neighbourhood Planning and Infrastructure Bill announced in the Queen’s Speech this week, it’s clear that increasing the supply of homes remains a top priority.

This new Bill will streamline the planning process and give local communities more control in the process of constructing new homes. This is something we support, as it should spur future development across the country. However, if the government doesn’t focus on affordability in this new bill or include affordable tenures within the definition of ‘starter homes’, we may still face a shortage of genuinely affordable homes.

Richard Connolly, CEO of Rentplus

Come and visit us at the Housing Plymouth 2016 event on Saturday 18th June at the Royal Parade Piazza, Plymouth

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We announced some fantastic news last week which is a significant milestone in our ongoing mission to deliver homes for working people to rent and ultimately own.

We have secured a significant investment of up to £70 million from BAE Pension Fund, enabling us to deliver 580 new homes which will allow tenants to rent on an affordable basis with an option to buy. This funding enables us to put a significant dent in our goal of building 5,000 new affordable homes by 2020 in order to help solve Britain’s housing crisis.

BAE Pension Fund has committed an initial £35 million to us via an inflation linked bond, with the possibility of an additional £35 million in the future. It has been a pleasure to work with BAE Pension Fund who used their intimate knowledge of the affordable housing sector to understand our unique offering. The team has worked with us over the past 18 months, during a period of significant market changes in the Registered Provider market, to successfully create an innovative funding structure for us.

We’re talking to a number of other potential funding partners to boost our investment even further. In order to deliver our ambitious pipeline of 8,500 homes we need £1 billion of funding in total.

One of the biggest benefits of our model is that it provides a continuous stream of affordable housing, because we endeavour to replace every home that is sold. Combined with the mixture of capital appreciation and rental income we can offer investors a stable, long-term, ethical, investment-grade opportunity. Keep watching this space for further developments.

Richard Connolly, CEO of Rentplus