‘Redfern is welcome but avoid hasty response’

Scaffolding around a new house in the countryside

Mortgage experts have backed the findings of a political review into declining homeownership but warned the Government against hasty action that might harm the mortgage market.

The Redfern Review calls for the creation of an independent housing commission to increase the number of homes being built.

The review recommends that the commission champion the cause of long-term housing supply and work with the existing National Infrastructure Commission. It says housing supply needs to be boosted and maintained for more than 20 years to reduce shortages.

In addition, it advises that the independent commission should consider the benefits of starter homes and Help to Buy to boost homeownership.

Imla executive director Peter Williams says: ““The review’s call for a standing independent housing commission is sensible.

“In recent years there has been a clear lack of long-term focus when it comes to housing policy with six housing ministers since 2010 alone.

“According to Imla’s latest Intermediary Lending Outlook, three-fifths of mortgage lenders feel the housing minister merry-go-round contributes to the lack of cohesive housing policy. An independent body could help address this.”

The review adds that the commission should also look at the health of the private rental sector and of the social housing arena.

The review recommended cross-party deals on long-term housing targets to encourage property developers to invest.

The Redfern Review was commissioned by the Labour Party and led by Taylor Wimpey chief executive Pete Redfern.

Others also welcomed the findings of the Redfern Review but had their own suggestions for addressing the issue.

Building Societies Association head of mortgage policy Paul Broadhead says: “As we consistently find through our consumer research, the biggest barrier facing homebuyers is their ability to raise a deposit. The size of that is related to the price of homes; and prices are pushed up by a lack of supply in the face of increasing demand.

“House-price inflation is underpinned, at least in part, by chronic underbuilding and decades of failure by successive governments to address this undersupply through a coherent housing strategy.”

Broadhead adds that private housebuilders are able to complete around 120,000 to 130,000 homes a year, far below the 250,000 needed to meet demand, and that local authorities must step up to help fill the gap.

Yorkshire Build­ing Society chief economist Andrew McPhillips agrees with the review’s claim that long-term reform is key, but adds that stamp duty reform could also help first-time buyers in the short term.

He adds: “Other measures could help first-time buyers, including making stamp duty a seller’s tax rather than a buyer’s tax, to help reduce upfront costs.

“Stamp duty is a significant burden for those looking to get onto the property ladder, adding to the overall difficulty of affording a home. Reforming the tax in this way should form part of the Government’s overall housing strategy, and would go some way towards helping more people to own their desired home.”

OneSavings Bank sales and marketing director John Eastgate says: “The housing crisis is quickly becoming an unwelcome part of the zeitgeist for millennials, as rising prices push homeownership out of reach for so many.

“We need homes across all tenures, building not only starter homes for first-time buyers but also social housing and build-to-rent.”

But Imla’s Williams warns that the Government should act with caution when making decisions about the future of the housing market, particularly for buy-to-let and private renting.

He says: “The private rental sector plays a hugely important role in providing affordable and secure accommodation to millions of people, and it is important that policymakers avoid damaging it in order to encourage specific tenure types.

“By discouraging buy-to-let investment and raising landlords’ costs, the Government risks increasing tenants’ rents – which would make it more difficult for them to raise deposits.”

According to Aldermore group managing director for mortgages Charles Haresnape, the review underestimates the long-term impact of not building enough houses to meet demand.

He says: “Where the Redfern Review pinpoints the start of the house-price boom in 1996, it is notable that, in the six years leading to the boom, annual housebuilding numbers fell almost 25 per cent.

“To diminish the impact that decades of undersupply have had on prices… is to bypass the major issue most see in the industry.”