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Investing in a diverse housing supply is crucial

Although house price growth is slowing, there was nevertheless a double-digit increase last year; we desperately need more houses if this is to be stemmed.

To face the problem of housing supply and achieve the lofty ambition of building 300,000 new housing units per year, investing in the diversity of supply is essential.

So I was delighted to see the government announce the launch of the Help to Build scheme, with £150million in funding to support those who want to build their own homes.

The government estimates that the scheme could make a vital contribution to the overall self-build and custom-build sector by developing 30-40,000 new homes a year.

The majority of active lenders in the self-build market are smaller regional building societies, with their more personalized approach to underwriting and releasing funds that suits these mortgages well.

So it’s no surprise that the Darlington Building Society is the first lender to sign up for the Help to Build program, and I hope other lenders will soon join.

Self-built and custom homes, of all tenures, have a key role to play in increasing housing supply, which is why we have long called for changes to make them more common on the housing market. We actively contributed to the Bacon Review, which provided a number of recommendations on how these properties can be scaled in a major way.

He highlighted an opportunity for mortgage lenders, purpose-built housing providers, government and regulators to work together and seize the opportunity to make a step change in our housing supply and provide long-awaited choice. The investment announced on June 24 is a good step in this direction, but more collaboration and action is needed with all stakeholders if the full potential of self-build is to be realized.

Also last month we saw the Prime Minister make a number of housing market announcements, the majority of which were aimed at getting people onto and staying on the property ladder, rather than increase the supply of housing.

These included the launch of a comprehensive review of the mortgage market, the extension of the right to buy to social housing and changes to the mortgage interest support (SMI) loan. However, as is often the case with high-profile speeches, details are lacking, leaving us with many questions.

For example, we all know that the biggest challenge for first-time home buyers (FTB) are increasing the deposit, but as it appears the new mortgage market review is unlikely to include FCA affordability regulations within its scope, it is difficult to see how this will provide better access to FTBs when the biggest barrier remains unchanged. Although we have seen the Financial Policy Committee (FPC) remove the +3% stress test from August, this will not have a big impact on the market as borrowers will still need to raise a deposit and demonstrate their financial capacity. For a small number of people, however, it will make a big difference.

Clarification is also needed on the right to purchase extension, such as who will fund the handover as these are not government-owned properties and how the government will deliver on its ‘promise’ to replace every property sold , one for one, and no further deplete the already weak social housing stock.

To end on a positive note, I am delighted that the Prime Minister has confirmed that the waiting period for the SMI will be reduced from 9 to 3 months. Regular readers of my articles will know that we have been lobbying for this change for a very long time, hopefully it will be implemented quickly and support will be provided to those in need without further delay.

Paul Broadhead is Head of Mortgage and Housing Policy at the Building Society Association