Getting a Foot on The Ladder
Darren Shaughnessy, Director Kings Residential, Estate Agents in Manchester and Letting Agents in Manchester writes:
With house prices reaching all time highs and at multiples that are beyond the first time buyer with no equity something needs to be done to help the virgin home-owner onto the ladder.
Reductions in interest rates do not work because this just increases spending power across the board and drives up prices. Building and regeneration programs don’t seem to work because they are in the wrong locations for the new home owner and are snapped up by the long-distance property investors and filled with tenants (or wannabe first time buyers) who cannot afford to buy the same properties in the first place. Clearly we require more housing stock but with buy to let investors fuelling the house price boom the very people who underpin the housing market, the first time buyers are priced out.
The solution may lay in social exclusion from certain developments. What we need are a little more guts and forward thinking from the town planners and schemes like the one announced by Ikea recently. They are to offer houses at about 20% under the market value for comparable houses in the area. Only households with an income between £15,000 and £30,000 will be eligible to purchase the houses and the purchasers will have to complete an application form and pass pre-defined approval criteria. The buy to let investor is excluded from eligibility as are people who already own their own home (unless it is being sold due to a relationship breakdown).
The houses known as BoKloks are expected to sell for between £100,000 and £150,000 with flats from £70,000. The first of these developments is being located in Gateshead with Glasgow following shortly afterwards. So what we are looking for are socially responsible property developers to follow the lead and implement the same strategy across the country.
The answer probably lies in the hands of the town planners. Instead of trying to woo any and all property developers to build on every plot of land lying bare or derelict and being grateful to them for it, perhaps they should be thinking about the wider social implications of what is happening. I am not aware of sale prices being a tool that the planners use to achieve their wider objectives but maybe it should be. If the planners looked at a development and said, “OK, we like it but the prices are going to exclude the local population so it does not meet our planning objectives - reduce the prices or planning application denied”, maybe the first-time buyer would get a chance to get a foot on the ladder and the entire market would be more robust.