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Government to give 20% subsidy for £450,000 starter homes


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Old 03-01-2017, 23:07
ShaunIOW
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An absolute joke - the land and subsidies should be used for council houses with affordable rent (especially 1 bedroom ones for those who want to move to avoid the bedroom tax) not to line the pockets of building companies, and people well off enough to to be able to buy anyway, but of course more affordable rent council houses and flats will also bring down rental income for the buy-to-let brigade in the area so will never happen.
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Old 03-01-2017, 23:28
bingbong
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Huge amount of land available in London for affordable rental housing, Hyde Park, Regents Park and Richmond Park, no need to build any more roads, no need for tenants to own cars!! Instead of digging up the Green Belt to build houses where people don't really want to live, dig up the central London parks, the lands free.
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Old 03-01-2017, 23:44
MARTYM8
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£450 000 isn't a starter home and giving away 90 grand to a small section of society is taking the piss.
A truly dreadful policy too.

The government isn't paying for the 20 per cent discount and nor are the developers - local councils are and thus local taxpayers.

Councils normally levy planning charges and levies on developers to pay for new schools, roads, GP surgeries, play areas and more that are needed out of the profits they make on their developments. Developers will be exempt from paying these if they offer these starter homes - so local taxpayers will have to pay for the roads and schools etc instead.

Developers will also be able to avoid having as much affordable housing - thus hitting the low paid who need social rented properties or those using shared ownership. All so that better off middle class people who can afford 80 per cent of the market price can get a discount.

It's a great system for developers - for most young people needing housing it won't help anyway as they cannot afford to pay even 80 per cent. But of course middle class bank of mum and dad types who get mummy and daddy to stump up their deposit will be quids in.

And developers will be laughing all the way to the bank!
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Old 04-01-2017, 00:06
Mark_Jones9
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A truly dreadful policy too.

The government isn't paying for the 20 per cent discount and nor are the developers - local councils are and thus local taxpayers.

Councils normally levy planning charges and levies on developers to pay for new schools, roads, GP surgeries, play areas and more that are needed out of the profits they make on their developments. Developers will be exempt from paying these if they offer these starter homes - so local taxpayers will have to pay for the roads and schools etc instead.

Developers will also be able to avoid having as much affordable housing - thus hitting the low paid who need social rented properties or those using shared ownership. All so that better off middle class people who can afford 80 per cent of the market price can get a discount.

It's a great system for developers - for most young people needing housing it won't help anyway as they cannot afford to pay even 80 per cent. But of course middle class bank of mum and dad types who get mummy and daddy to stump up their deposit will be quids in.

And developers will be laughing all the way to the bank!
The developers will be exempt from the affordable housing contributions and general infrastructure pot contributions, but not from having to pay for infrastructure needed due to the development. In other words starter home buyers and developers will not be subsidizing the local authority.

Central government will however pay local authorities a new homes bonus equal to the properties council tax band (+£350 if its affordable housing) for five years.
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Old 04-01-2017, 01:52
MARTYM8
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The developers will be exempt from the affordable housing contributions and general infrastructure pot contributions, but not from having to pay for infrastructure needed due to the development. In other words starter home buyers and developers will not be subsidizing the local authority.

Central government will however pay local authorities a new homes bonus equal to the properties council tax band (+£350 if its affordable housing) for five years.

They aren't exempt from paying the general community infrastructure levy are they - the general charge applied to all new developments to fund local infrastructure. The new homes bonus on a home is virtually nothing compared to the costs arising from new developments.

I have a great new idea. Why don't we let every company off paying their taxes if they offer a 20 per cent discount on their products to people aged under 40.

If that sounds crazy it is - but that is exactly what is being proposed here!
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Old 04-01-2017, 07:16
MAW
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You'd have thought this was fairly simple to get right. Though it might involve telling a few greedy bastards the facts of life. £450 000 as a top price is an utter joke. I'm invited to a wedding soon. He's a McKinseys grad programme man, she's a rapidly rising civil servant. Both 4 years out of uni. I'd say they are doing very well indeed, but 450000 is nothing but a dream to them. And even if they could afford it after the discount, they themselves would say they are the last couple in need of government assistance, it's ridiculous.
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Old 04-01-2017, 08:24
Morlock
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"Ending the something for nothing culture" but only for those who desperately need something.
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Old 04-01-2017, 09:33
Tassium
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I don't think that the government will do well politically out of this latest wheeze.

Attempting to spin this one is yet another error, DS forum spinners.
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Old 04-01-2017, 10:02
LakieLady
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The developers buying the land will have to build starter homes that they will have to sell at 20% below market price.

New-builds are usually about 20% more than the equivalent pre-owned property, so the starter home buyers could just buy one of those instead.

I don't see how this helps anyone other than house-builders and comfortably off people who are going to get a discount they don't need.
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Old 04-01-2017, 10:10
Mark_Jones9
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They aren't exempt from paying the general community infrastructure levy are they - the general charge applied to all new developments to fund local infrastructure. The new homes bonus on a home is virtually nothing compared to the costs arising from new developments.

I have a great new idea. Why don't we let every company off paying their taxes if they offer a 20 per cent discount on their products to people aged under 40.

If that sounds crazy it is - but that is exactly what is being proposed here!
The developers are not exempt from paying infrastructure costs caused by their development. They are only exempt from paying into the affordable housing contribution and any general infrastructure traiffs. So the development is not being subsidized. It is as you point out not having to pay a tax usually levied by local authorities on the building of new homes.

Do we want the government to increase house building by using state money to acquire brown field sites, demolish the existing building, decontaminate the land, and then sell the land to developers to build housing on? I would say yes.

Do we want the government acting to lower house prices for first time buyers of homes that will be owner occupied homes, so driving down house prices, while trying to prevent buy to let landlords and property speculators profiting from the scheme? I would say yes.

Do we want the government increasing house building for owner occupation on the brown field sites by providing incentives to developers, through not having them subsidize local authorities or having to pay for the building of affordable housing? I would say yes because we need more housing.

Do we want to increase the building of affordable homes? I would say yes but that it is for local authorities and housing associations. Forcing private developers to fund affordable and social housing may just decreases house building.

Do we want to improve the general infrastructure of the UK? I would say yes but that is for central and local government. Forcing private developers to fund general infrastructure improvements, as opposed to infrastructure improvements needed due to their development, may just decrease house building.
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Old 04-01-2017, 10:10
LakieLady
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Councils normally levy planning charges and levies on developers to pay for new schools, roads, GP surgeries, play areas and more that are needed out of the profits they make on their developments. Developers will be exempt from paying these if they offer these starter homes - so local taxpayers will have to pay for the roads and schools etc instead.
They're exempt from the community infrastructure levy as well? This is a bloody scandal.

What council in their right mind is going to go for this? The liability placed on the council will outweigh any benefits. (scuttles off to check list of Tory donors for housebuilding company directors ...)
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Old 04-01-2017, 10:35
MARTYM8
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They're exempt from the community infrastructure levy as well? This is a bloody scandal.

What council in their right mind is going to go for this? The liability placed on the council will outweigh any benefits. (scuttles off to check list of Tory donors for housebuilding company directors ...)
I am more concerned as to why the government is effectively giving first time buyers who can afford a £360000 mortgage £90000 of taxpayers money (via lost planning levies) to buy a home. In order to get a £360,000 mortgage you would need to earn £90,000 a year - nearly triple the average wage.

How is this acceptable or warranted when we are cutting social care to the elderly and disabled?

Why don't we exempt shops from paying business rates if they agree to offer 20 per cent discounts to the under 40s.
Why don't we exempt car makers from paying national insurance and VAT if they offer under 40s 20 per cent off the price of a new car
Why don't we exempt Apple from paying corporation tax if they offer under 40s 20 per cent off the price of iPhones and iPads.

If this was applied to any other sector than housing we would think the policy crazy and insane - cos it is.
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Old 04-01-2017, 10:38
Pumping Iron
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New-builds are usually about 20% more than the equivalent pre-owned property, so the starter home buyers could just buy one of those instead.

I don't see how this helps anyone other than house-builders and comfortably off people who are going to get a discount they don't need.
Where'd you get that figure from?
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Old 04-01-2017, 10:43
Mark_Jones9
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They're exempt from the community infrastructure levy as well?
They are not exempt from section 106 infrastructure costs caused by the development. So any improvements to say schools or roads or GP surgeries, play areas, etc needed due to the development or the increased population of the development will be paid.

They will be exempt from the community infrastructure levy that is a tariff charged for general infrastructure. I believe often instead of infrastructure contributions under section 106. The difference being section 106 infrastructure costs are bespoke per development, the community infrastructure levy is not its just a general tariff.
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Old 04-01-2017, 11:04
Mark_Jones9
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I am more concerned as to why the government is effectively giving first time buyers who can afford a £360000 mortgage £90000 of taxpayers money (via lost planning levies) to buy a home. In order to get a £360,000 mortgage you would need to earn £90,000 a year - nearly triple the average wage.
The government is forcing private developers on brown field sites made fit to build on by the state to sell to first time buyers who will be owner occupiers at below market price. That means the government is helping to increase house building and helping to drive down house prices while having measures to try and prevent buy to let landlords and property speculators from profiting from the scheme.

The mix of housing will be up to local authority planning. Its local authorities that wanted the maximum house price so high, so it would enable a mix of housing. I would expect some four bed or at least some three bed houses to be in a mix of housing on a development. Maximum price of £450,000 in London, £250,000 outside London makes sense in that context. Also remember these houses are being built by private developers and sold for profit, they are not social housing.

How is this acceptable or warranted when we are cutting social care to the elderly and disabled?
Because the government money is being mostly recouped. The fund is used to buy brown field sites and make them fit to build on then the land is sold to developers with the money paid going back into the fund. The developers also still have to pay for any infrastructure improvements or new infrastructure needed due to the development. So the development does not cost the local authority money. The local authority gains from the development through council tax paid by the new home owners and a new homes bonus paid by central government for five years equal to the council tax band each year.

Why don't we exempt shops from paying business rates if they agree to offer 20 per cent discounts to the under 40s.
Why don't we exempt car makers from paying national insurance and VAT if they offer under 40s 20 per cent off the price of a new car
Why don't we exempt Apple from paying corporation tax if they offer under 40s 20 per cent off the price of iPhones and iPads.

If this was applied to any other sector than housing we would think the policy crazy and insane - cos it is.
If the obligations on developers buying the land made fit to build on by the state, were removed. No obligation to sell at a discount to people who will be owner occupiers. Would you find the government policy less objectionable.
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Old 04-01-2017, 11:07
Dotheboyshall
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How is giving massive subsidies going to reduce house prices????
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Old 04-01-2017, 11:08
Mark_Jones9
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How is giving massive subsidies going to reduce house prices????
Forcing developers to sell at 20% below market price is not a subsidy. As houses compete for buyers, both more housing being built and it being cheaper helps drive down house prices.
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Old 04-01-2017, 11:11
MARTYM8
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How is giving massive subsidies going to reduce house prices????
It isn't. The government wants house prices to rise as it gives the illusion of rising wealth at a time of wage stagnation for the middle aged and older voters.

The young can just go lump it - they just need to get into lots of debt to help boost our economy and buy a flat.
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Old 04-01-2017, 11:46
MARTYM8
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Forcing developers to sell at 20% below market price is not a subsidy. As houses compete for buyers, both more housing being built and it being cheaper helps drive down house prices.
When they are being let off paying taxes they would otherwise have to pay - and will still apply the same taxes to other developers building houses or commercial properties in the area - it surely is a subsidy. Cos if government let's some people or businesses off paying taxes and makes others in the same circumstance still pay them it is a subsidy.

I would prefer to call it what it really is however - a thank you present for the Tory parties second biggest group of donors (property developers) and some extra business for their biggest (bankers). Do you really think it's the government that thinks up these schemes - rather than lobbyists from these sectors promoting them?

It is state aid in all but name - surprising the EU haven't intervened!
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Old 04-01-2017, 11:55
Dotheboyshall
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A sensible government would have had a competition for a simple modern property that could be easily mass produced and installed on brown field sites.

Sort of a modern version of homes fit for heroes which occurred after both the world wars
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Old 04-01-2017, 11:58
jmclaugh
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It says a lot when a 'starter home' is £250,000 outside London and £450,000 in London and the average UK salary is £26,500 and you pay higher rate income tax on a salary over £43,000.
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Old 04-01-2017, 11:59
tim59
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Forcing developers to sell at 20% below market price is not a subsidy. As houses compete for buyers, both more housing being built and it being cheaper helps drive down house prices.
Surely if the free housing market is working like its meant to work, the government should not need to be involved. And forcing developers to sell at 20% below market price is not part of a free market. If its should a good deal why does not the government built houses. Are we going to see retailers forced by the state to sell goods at 20% market value
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Old 04-01-2017, 12:05
moox
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They're exempt from the community infrastructure levy as well? This is a bloody scandal.

What council in their right mind is going to go for this? The liability placed on the council will outweigh any benefits. (scuttles off to check list of Tory donors for housebuilding company directors ...)
Nothing new with "affordable" housing. My village is seething because that's the way developers get around pesky levies.

The main road through the village might as well be a motorway for all the traffic it carries, the school is full (can't expand; they let a developer build right up against it), the utilities have issues.

But that's fine, because making developers pay for infrastructure would hurt their precious profit margins and we can't have that.

In our case, the council does apply the levy to the whole development... but then they add "this does not apply to affordable housing units" or whatever the official guff is. "affordable" houses comprise 98% of the total, so that's not very much money.
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Old 04-01-2017, 12:24
MARTYM8
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It says a lot when a 'starter home' is £250,000 outside London and £450,000 in London and the average UK salary is £26,500 and you pay higher rate income tax on a salary over £43,000.
Insane isn't it. Starter homes for people earning £100k!

If you can afford to buy a £450k property you shouldn't really need a subsidy,

These same developers of these new builds still made profits when house prices in London were half what they are now six years ago. Why don't they do the decent thing and just cut their prices?A
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Old 04-01-2017, 12:25
Mark_Jones9
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A sensible government would have had a competition for a simple modern property that could be easily mass produced and installed on brown field sites.

Sort of a modern version of homes fit for heroes which occurred after both the world wars
A different government scheme is helping to enable the mass production and building of 100,000 modular homes by 2020. The government has already helped broker a deal for factories to mass produce the housing to be set up and for 25,000 modular homes for housing associations.
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