The Mayor of London recently announced a £25m investment in Pocket Living to build 1,059 new homes in London by March 2021, a third of these are expected to be built using offsite construction.
Pocket living provides homes for first-time buyers; typically one or two-bed flats. These properties are sold at a 20 per cent discount to market rate and are aimed at local people who must already live in the borough and be first-time buyers.
Building Societies remain supportive of offsite construction as a growing sector and have been working hard to overcome the challenges to lending on these types of properties, which we identified in the BSA’s recent report Laying the foundations for MMC.
Any kind of initiative which aims to increase housing supply is certainly to be welcomed as is increased support for offsite construction, however, does this particular investment fit with the Governments strategic plan to deliver housing? It is hard to say as we don’t know exactly what that looks like yet. Delivering over 1000 homes in London is a step in the right direction, both the UK and Scottish Governments have stated that they would like to see offsite construction providing a greater contribution to housing supply. It is good to see the Mayor of London making a bold step investing in it.
Lending against a property which is discounted against market rate is not without challenge, as the Government found out when trying to launch its flagship Starter Homes Scheme. It can be difficult to establish an accurate valuation and factor in any restrictions such as with this scheme, which stipulates you must be from the local area. These issues will need to be ironed out in the future but without innovation in homebuying first time buyers risk being left behind.
We are 100% behind providing affordable homes but to truly deliver affordable housing it need to be clear who these will be affordable for and will a 20% discount really make these homes affordable for those Londoners who are most in need?
Originally published as part of the BSA's monthly Newsbite newsletter.
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