David Cameron to commission 13,000 new homes

The government wants to boost affordable housing by opening doors to smaller developers.

by Rebecca Smith
Last Updated: 12 Feb 2016

House prices continue to move in one direction, something estate agents say is unlikely to be halted anytime soon. A long-term cause of that has been a lack of supply. So the prime minister's latest move initially looks like a significant one – commissioning a first wave of up to 13,000 homes on public land.

The government said its new policy of direct commissioning should result in homes being built at a faster rate, with smaller developers able to build on government sites where planning permission is already in place. Currently the top eight house builders provide half of new homes, so this could prove a useful boost to small and medium-sized building firms which lack the resources and access to land, but are ready to build. The first batch will start on four sites outside of the capital, followed by Old Oak Common in north west London. 

Rhian Kelly, the CBI's environment director, said the lack of available land and drawn-out planning processes were common 'serious impediments to small and medium-sized housebuilders looking to grow' and the Prime Minister's accouncement could be 'a real spur to our ability to build more homes'.

Direct commissioning will allow the government to take responsibility for developing land, rather than large building firms. David Cameron said the package marked ‘a huge shift in government policy’ and that nothing had been done ‘on this scale in three decades – government rolling its sleeves up and directly getting homes built’. It marks the largest intervention of its kind since the redevelopment of London’s Docklands by Margaret Thatcher's government (which was led by MT founder Lord Heseltine).

Plans have also been put in motion for a new £1.2bn fund to pay for 30,000 ‘affordable’ starter homes on brownfield sites. This would 'fast-track' the creation of the starter homes and another 30,000 market rate homes on 500 new sites by 2020, which the government said should keep it on track to deliver its promise to create 200,000 starter homes over the next five years.  

But shadow housing minister John Healey said this announcement didn’t actually promise any new affordable homes beyond those already announced. 'With home ownership down to the lowest level in a generation and fewer homes built over the last five years than under any peacetime government since the 1920s, David Cameron needs to do much more to fix his five years of failure on housing,’ he added.

The starter home programme says first-time buyers will be able to purchase new houses or flats at a 20% discount – though the initiative has raised concerns over whether this will mean even fewer affordable homes now being provided for people to rent. While those who buy the homes won’t be able to sell or rent the properties for their full market value for five years, after that they can, meaning the ‘affordable’ tag is a one-time only offer.

Housing charity Shelter previously called the starter home schemes a ‘non-starter’, calculating that outside of London, the houses will cost up to nine times the average salary, and 11.5 times the average wage in the capital.

It’ll all be well and good if building more houses means prices fall in time and more people can then afford to buy.If prices continue to rise, only those from the wealthy middle classes may be able to make use of the extra government assistance - leaving many renting when they don't want to be. The government is keen to trumpet this announcement, but its success will take time to materialise – if it does at all.

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