Ut­ter mad­ness pre­vails when it comes to hous­ing pol­icy in the UK

Financial Mirror (Cyprus) - - FRONT PAGE -

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.

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