Chancellor George Osborne is due to announce that the government’s rural productivity plan will include measures to allow family homes to be built on farmland and greenfield sites in an effort to support local people, with rural areas seeing 60,000 people a year relocating to the country, pricing young locals out of the market. The measure will see planning applications fast-tracked and local planning charges for developers waived. The properties will be ear-marked for first-time buyers under 40 with connections to the villages around which they are to be built, with the homes to be offered at 20% lower than market value.
Source: The Times, Daily Mail, The Sun, The Daily Telegraph
The problem with giving discounts like this is that, as we’ve seen in the context of discounts to council tenants, is that it ends up being a generous subsidy to the first purchaser but doesn’t provide any sort of long-term solution. Five years (or whatever) later the lucky first-time buyer sells the property on the open market, pockets a very healthy profit and in terms of local houses for local people you’re back where you started. In principle what is needed is to impose a planning condition requiring the property to be occupied in perpetuity by a “local young person” (however defined) and to leave it to the market to determine what effect that has on the value of the property both initially and long-term. You might object that the practical difficulties of drafting and enforcing such a condition are insuperable. On the other hand, Mr Osborne’s plan necessitates deciding who is or isn’t entitled to buy the property: if that is practicable it must be equally practicable to decide who is or isn’t entitled to occupy it.