How to bag an unfair share of Starter Homes cash, by Peter Bill

Last week, George Osborne pledged £2.3 billion to subsidise the construction of 200,000 Starter Homes and £4 billion to help build 135,000 shared ownership units.

"We are the builders now!" declared the chancellor. He was greeted with cheers in the Commons. "No, you're bloody not!" shouted the MD of MegaMini Homes plc at the 85-inch Samsung, hung on his boardroom wall. "We are!"

Let's eavesdrop on this imaginary developer of ten per cent of new homes built in the UK today. Round the boardroom table are the finance, sales and planning directors. Alongside them sits the MD, who was rung only yesterday by the chancellor's second most junior aide. Their task? To figure out how to cope with political demands that effectively mean risking the company by doubling its planned rate of growth.

MD: "I know, I know, we're only one year into a five-year plan to grow sales at ten per cent, from 10,000 a year to 16,000 by 2020. George says we have to take the lead, show an example, especially on Starter Homes. He suggests that we up our output to 22,000 units a year by 2020, with half of these being Starter Homes and shared ownership properties."

Financial director: "George? Very cosy. What are you after, a bloody knighthood? 'George' doesn't have to build the units. We will have to add £500 million to our borrowing limits to fund the extra construction, the costs of which are already skyrocketing. Imagine the fun the brickmakers are going to have now. As for getting labour, well, we'll have to double our recruitment budget in the Baltics."

Sales director: "Calm down. I have a plan. We can re-designate the poorer or smaller parts of upcoming phases and new sites as Starter Homes. Our guys are already working on a proposal that will push up the prices on private sales and squeeze down the size of Starter Homes to pack in more. A combination of that and the money coming our way will enable us to show the required 20 per cent discount."

FD: "Fine. But how do we get our slice of this mystical £2.3 billion? More importantly, how does the new regime affect our section 106 arrangements?"

Planning director: "Look, I haven't a clue how all this is going to work. All I do know is that I will need to double my budget for lawyers and planning consultants to cope with renegotiations and the new rules."

MD: "I have reached a decision. We nearly went bankrupt in 2008 when the market crashed. Bugger the knighthood. Let's stick with the original plan. But market more of the smaller units as Starter Homes, so we can grab the money for doing so. Let's stay out of the shared ownership sector. Let that be the housing associations' problem, God help them. If the market crashes, we draw in our horns. Ours is not to do the politicians' bidding."

Peter Bill is the author of Planet Property www.planet-property.net


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