We must free up more land for new-build homes
When my parents’ generation first started married life their big concern was obtaining a house that was wind and watertight and offered a basic standard of comfort.
Fast forward seven generations and there is no shortage of housing available (at least privately). What concerns most people attempting to rent or to get a foot on the home-ownership ladder is the affordability of the stock. The Westminster housing Secretary, and erstwhile Aberdonian, Michael Gove, admitted as such when he put the Conservatives’ poor showing at the local elections down to lack of support for young, property-owning aspirants.
Now Mr Gove was speaking specifically about the party’s performance in London and, yes, the housing situation in London is not reflective of the whole of England just as England is not reflective of Scotland either.
I am, however, surprised, that housing is not the political issue in Scotland as it is in London – because it should be. There are, of course, limits to what politicians can achieve but within the powers they do have are actions that would increase housing choice and affordability – for all classes of Scots.
Let me start by calling for more public housing. Many families currently paying commercial rents would have been allocated a council house 40 years ago but the big sell-off to sitting tenants (and non-replacement of stock) stopped all that. Unfortunately landlords are unfairly criticised when all they are doing is charging the market rent, sufficient to provide them with an acceptable return on investment. And at least they are providing a roof over peoples’ heads;.
While more council housing would release pressure on the private rented sector, I’m confident demand from those tenants able to afford commercial rents would still be sufficient to keep the market buoyant.
Affordability, however, is not just a rental issue. As the population grows and people demand more personal space, existing owner-occupier stock must be complemented by new-build, one of the main drivers of the cost being land. Housebuilders will, of course, attempt to squeeze as much profit out of each site but land is the great contributor to base price. Therefore making more virgin land available for housing should be reflected in cheaper land and, by implication, more competitive new-build prices.
While one respects the concerns of central and local government to prevent “urban sprawl”, the fact is that only around five per cent of Scotland is actually built-up (which is less than half of England). Clearly a huge chunk of the Scottish land mass is not suitable for development because of unsuitable terrain or remoteness but surely there is scope, even in the Central Belt, for a more liberal policy towards land for housebuilding?
Another vote-losing issue referred to by Michael Gove related to young people who paid more in rent than they would on a mortgage but did not qualify for a home loan.
This is, in part, a consequence of the bad debt inherited by banks and building societies during the early noughties when LTV (loan to value) mortgages of up to 125 per cent were on offer. The inevitable result is now stricter criteria for mortgage applicants.
Sadly, with interest rates on the way up, not down, I do not see this changing anytime soon. David Alexander is managing director of DJ Alexander