Published: Thursday, 26th May 2016
Starter Homes initiative risks destabilising the housing market, warns the Council of Mortgage Lenders…
The Council of Mortgage Lenders (CML) has warned ministers that the administration’s Starter Homes policy risks distorting the housing market and urged the government to set a less ambitious target.
There should be a maximum 15 per cent requirement for Starter Homes on developments, rather than the 20 per cent the government has proposed, CML has suggested.
Responding to the latest consultation on the policy CML argued that 15 per cent would “better enable a mix of affordable housing tenures to exist on sites, especially given that DCLG analysis shows that commonly 20 per cent is the entire affordable housing proportion on site, and therefore would constrain other tenures”.
The body said the government’s aim to build 200,000 Starter Homes by 2020 risked destabilising the market because they would make up a “significant” proportion of all new build properties.
It stated: “In the context of overall new build housing, the scheme would represent a significant proportion of all new build, and that presents a market distortion risk.”
CML has called for the monitoring of the policy “to ensure that the potential benefits intended are realised without unintended consequences and, in particular, monitor any housing market distortion”.
CML members hold around 95 per cent of UK mortgage market assets.