With the Chancellor’s Autumn Budget fast approaching, it is promising that housing looks set to be a key area of focus for the Government.
Here is what I hope to see introduced to push the UK towards a housebuilding revolution.
1. Focus on supply first, demand second
Help to Buy has enabled 81 per cent of first-time buyers to afford properties that would otherwise have been out of reach. However, this is only part of the solution. The additional £10bn the Government has pledged for Help to Buy may extend the scheme but it will not fully address the more troubling side of the issue: supply.
Annual house price inflation has been an unwanted side-effect of this disconnect. We need the Government to inject more funding into supply to enable at least 250,000 new homes to be built each year in order to keep up with demand. Whether this is achieved through specific Build to Rent properties or traditional housing stock, more needs to be built across all types of tenure.
2. Support for local building developers and relaxation of building restrictions
Developers have a vital role to play in the health and stability of the property market but affordable housing offers little incentive for investment if they are not given enough funding or are unable to build.
As part of any commitment to increase supply, the Government needs to provide developers with the backing they need to engage with this part of the market and the Chancellor needs to acknowledge their uncertainty. For example, the fact that Help to Buy has been guaranteed only until 2021 is already having an impact on long-term planning for both developers and lenders. If that date was extended, coupled with more funding for local developers and a relaxation of some planning rules, all parties would benefit from greater certainty, which would encourage more building programmes.
3. Modernising green-belt legislation
A major reason for the shortfall in housebuilding is cited as being a shortage of available land but that is a misperception caused by outdated green-belt regulations. It makes no sense for derelict and unused green-belt land to remain untouchable when we are struggling to accommodate people in cities in a way that is both sustainable and allows urban areas to grow.
Opposition from communities in the form of political ‘not in my back yard’ attitudes has created a difficult atmosphere whereby the need for housing is countered by a fierce anti-change rhetoric.
All the major parties pledged to protect green-belt land during the general election but these attitudes need to be modernised. A creative and flexible approach is needed in order to ensure all available land is used as constructively as possible.
4. Scrapping of stamp duty for some
Supply is not the only issue. For many first-time buyers struggling to save for a deposit, or last-time buyers looking to downsize, the prohibitive amount needed for stamp duty — over £11,000 for the average first-time buyer in the capital — is a roadblock.
A stamp duty reduction or exemption would help stimulate the housing market while also enabling older homeowners to downsize and free up thousands of properties. If we can incentivise people to move by eliminating certain financial barriers such as stamp duty, we can address some of the bottlenecks choking the market.
5. But not a relaxation of all restrictions…
The Government’s decision to hold a consultation on rogue agents and landlords will help prevent the exploitation of tenants.
A banning of agency fees was welcomed by many in the last Autumn Statement and, with the private rental sector accounting for 20 per cent of the market, it is vital to use government regulation to keep it a secure and viable alternative to buying.
To achieve real change in the UK property market, the Chancellor must use the Autumn Budget to announce radical reforms. If the Government continues to delay on these issues, the problems with our broken housing market will only become worse. It’s time for a housebuilding revolution.
Jeremy Duncombe is director at Legal & General Mortgage Club