Cheap homes plan greeted by 'widespread scepticism'
Housebuilders describe Prescott's proposal to build £60,000 starter homes as 'a nonsense'
The property industry has reacted with scorn and scepticism to deputy Prime Minister John Prescott's latest plan to help the housing market in this south-east, announced at last week's Labour Party conference.
Prescott proposes to put public sector sites on to the market for free as a means of building homes for as little as £60,000 and helping first-time buyers get on the first rung of 'an affordable housing ladder'.
But Country & Metropolitan chief executive Stephen Wicks slammed the proposal as 'a nonsense' while the RICS estimates that the minimum cost of building a home, after taking land out of the equation, is £80,000. The RICS says the cost is nearer £100,000 when design and project management fees and developer's profit are included.
Prescott claimed at the conference that the experience of other parts of Europe, where modern construction techniques are used, showed that a £60,000 starter home was possible.
But while Prescott's proposal is still 'being developed', Pierre Williams, spokesman for the House Builders Federation, said there was 'widespread scepticism' that it would get off the ground.
Williams said: 'If indeed it was possible, the margins would be so tight it's unlikely that we'll see anybody willing to embrace it because it simply fails to take in the additional costs of [the government's] sustainable communities plan.'
He continued: 'As the sustainable communities plan and planning policy dictate, it's not a question of building houses any more, it's a question of building sustainable communities and those communities can only be sustainable if they provide the infrastructure - social and economic - required. Without that investment from government, the sites being deemed possible for release for these alleged £60,000 homes are not going to provide what's needed. But we need more detail,'
However, he added: 'If the government believes it can be done, we're prepared to listen.'
Prescott appears to be suggesting that individual government departments as well as English Partnerships will provide surplus land 'based around an equity share model' rather than selling to the highest bidder.
Richard Donner, head of residential research at FPDSavills, believes the plan could work: 'In theory if you give land away for nothing and as long as you can sell it for 20% more than you can build it for, then I don't see a massive problem.'
Donnell added: 'If you get land for nothing then surely something must be deliverable, even if it costs you £100,000 to build a unit. I can't believe it's a complete non-starter.'
But there are outstanding issues, said Donnell: 'Where is the land? Who's going to live there?' There is also scepticism over the goodwill of cash-strapped government departments. English Partnerships' own analysis of its land bank has shown that most of it is in areas of relatively weak housing demand. Williams added: 'The government might have some land, which could perhaps be provided at zero cost. That in itself would depend on the government departments that own the land, many of whom rely on funding through the sale to the highest bidder.'
PropertyWeek, 8th October 2004
