Utter madness prevails when it comes to housing policy in the UK
As I feared, housing policy has not been visible on the political agenda in the UK in recent weeks. It seems we now have to wait until the party conference season to see how much weight is being given to the property industry as Brexit continues to be all consuming.
It is not as if the housing crisis has suddenly been getting better, week after week research shows that first-time buyers continue to struggle, that now enough houses are being built and that prices defy the odds and continue to rise. Rents are also creeping up.
The economy, which is important as it is so intrinsically linked with the housing market, recorded 0.3% growth in the second quarter and while this was an improvement on the 0.2% growth seen in the first quarter and in line with expectations, the one factor weighing on growth was the drop in construction output.
Indeed, construction output fell by 0.9% in the second quarter, largely reversing the 1.1% increase seen in the first three months of the year. There is some good news, that private housing construction activity was up 5.1% in June. This adds to the need for the government to put housing at the top of its agenda again.
Going into the conferences in late September and October, there have been renewed calls for a reform of stamp duty, and another key issue is the future of Helpto-Buy, the scheme which allows buyers of new homes to access a 20% equity loan to help pay for a deposit. It is due to end in 2021, but the Conservatives have pledged to consider its future as it is undoubtedly popular.
However, since they managed to scrape a tiny majority after the election, the Conservatives have yet to implement many of the changes outlined in the Housing White Paper published earlier this year.
Even if you look at the most optimistic new home building scenario with housing starts rising to 162,000 from 103,000 in 2012/2013 and forecasts of reaching 200,000 this year, it is still well short of the minimum of 250,000 a year needed.
And the trend is not universal. In London, for example, new home building has edged up a little this year, but projections suggest that completions will fall in 2017 and 2018 from current levels.
According to the Federation of Master Builders (FMB) the only way we will increase the number of new homes we are building is if Ministers act now to implement measures in the Housing White Paper to diversify the building sector and in particular remove barriers to small house builders.
This comes as a new report from the Local Government Association (LGA) highlighted the slow rate of house building. Both the LGA and the FMB say there are concerned that almost six months after the White Paper was published, there has been limited movement on a range of policies that, if implemented, could start making a difference today.
The LGA pointed out that most local authority areas have more homes built before 1930 than from any other period and with increasing numbers of people in the private rented sector, council leaders are also concerned that 28% of privately rented homes are not decent.
An increasing number of voices in the housing industry are concerned that stamp duty needs to be brought up to date to help both first-time buyers and people who want to downsize, but are put off by the tax which is paid in England, Wales and Northern Ireland and Land and Buildings Transaction Tax (LBTT) in Scotland.
According to Nick Leeming, chairman at Jackson-Stops & Staff, prohibitive levels of stamp duty continue to have a profound impact on market fluidity for higher value properties, and Jeremy Duncombe, director of the Legal & General Mortgage Club, agrees, pointing out that the current lack of supply and the barrier of stamp duty is still leaving many hopeful first-time buyers unable to get on the housing ladder.
Broker Aston Mead is also backing calls for a reduction to stamp duty across all property price brackets in order to boost the level of activity in the housing market and points out that not only is stamp duty a tax on moving, it also reduces the supply of new homes and this in turn further contributes to the housing affordability crisis.
All of this means that people often continue to rent when they would rather buy, or they remain stuck in a property which is either too big or too small for them. In the words of Aston Mead land and planning director Adam Hesse: It’s utter madness.