Should the State be responsible for Building new Properties?
Today the Chancellor of the Exchequer George Osborne will potentially address the public for the last time to announce his Autumn Statement. However, even though the Chancellor has yet to officially announce his plans as well as the current condition of the UK economy there have already been rumours concerning his statement. This has prompted other MPs to voice their opinions on how the UK can improve, with Danny Alexander – Chief Secretary to the Treasury – suggesting that houses will need to be built by the government in the future. How will all this affect landlords? PropertyQuoteDirect investigates:
The Current Housing Crisis
Here at PropertyQuoteDirect we have mentioned the housing crisis in numerous articles, including how it started, what the government is doing about it and whether these measures are helping it improve. Unfortunately, even though the government has invested in numerous projects to build new properties there is still a noticeable deficit across the country, meaning that the crisis is far from being solved. One issue is that property developers are still wary over building new properties as they cannot be guaranteed long-term return on investment. During the recession the housing market stalled, and even though the economy is now improving some developers are still concerned that they could lose money if the same happens again. This ultimately worsens the housing crisis as it means that desperately needed housing is not available which had led to the inflation of property prices and the markets remaining unstable.
State Funded Properties
State funded properties are nothing new, however these properties are usually for social housing purposes and are therefore not-for-profit. However, earlier this week Chief Secretary to the Treasury Danny Alexander announced that he plans to create a new, “radical” scheme to create 300,000 private properties each year. He said: “In my view we need to be building in the region of 300,000 new homes every year. To get there requires us to think radically. An idea I’ve been promoting is direct government commissioning of housing. The message to the house building sector will be simple – if you don’t build, we will.
“We will be undertaking a detailed government review to examine the potential of direct government commissioning for housing to deliver the number of homes we need. And later on today I will be travelling to Northstowe in Cambridgeshire. Now it’s just a disused RAF base. This is the first time in a generation that the government has owned land, led a development on it of this scale and considered commissioning homes directly. Using the government’s balance sheet will ensure that the scheme is delivered up to twice as fast and we will be able to ensure that developers build the right type of housing. This is the first time in a generation the government has acted as a developer on its own land in this way.”
What does this mean for Landlords?
As usual, there has been no word from Mr Alexander on whether he plans on letting buy-to-let investors purchase government funded private properties in the future. It is likely that this debate will raise its head soon enough though as the private rental sector and how much freedom landlords have to buy private properties is a bone of contention for many MPs. Some believe that if fewer landlords purchased properties there would be more available for private buyers which would reduce house prices, while others claim that the private rental sector is an important part of the UK housing sector which millions of people rely on.
However, if the government are able to create 300,000 new properties each year going forward this issue may not be so problematic, as in theory there should be enough for both private and commercial buyers. It is likely that if the government does fund the creation of thousands of new homes there will be some sort of regulations put in place ensuring that all money made from the projects will be re-invested back into the private and social housing sectors.