How can we fix our broken housing market?
Published 14th August 2017
The government has announced bold new plans to fix the broken housing market and build more homes across England.
A housing white paper entitled “Fix our broken housing market” was launched by communities secretary Sajid Javid who admitted the current system isn’t working and is one of the greatest barriers to progress in Britain today.
However, the 104-page document attracted criticism f
rom various property industry pundits who said the paper merely re-treads old ground by repeating previously announced schemes such as Help to Buy or the Starter Homes initiative.
The main points in the paper are plans to build homes in the right places, speed up building, diversify the market, and help people to rent or buy an affordable home.
Javid pointed to research that shows how difficult it is to get on the housing ladder, with the average house now costing eight times more than average earnings – an all-time record. As a result, the proportion of people living in the expensive private rented sector has doubled since 2000 and that more than 2.2 million working households with below-average incomes spend a third or more of their disposable income on housing.
“Walk down your local high street today and there’s one sight you’re almost certain to see. Young people, faces pressed against the estate agent’s window, trying and failing to find a home they can afford. With prices continuing to sky rocket, if we don’t act now, a whole generation could be left behind. We need to do better, and that means tackling the failures at every point in the system,” said Javid, “The housing market in this country is broken and the solution means building many more houses in the places that people want to live.”
The new housing strategy for England includes giving councils powers to pressurise developers to start building on land they own. Builders who don’t complete plots in two years could lose their planning permission. The move is in response to campaigners who say developers are drip-feeding properties into the market to keep prices high.
The housing white paper also proposed tough new criteria on councils in high demand areas to calculate how many new homes they must build every five years. Building on the green belt will only be allowed in ‘exceptional circumstances’ while councils will be encouraged to build more high density tower blocks in towns.
The paper contained good news for smaller housing developers which find it difficult to compete with the big players. The government intends to make it easier for them to compete in future and said it will support innovative and under-used construction methods such as off-site factory builds.
The white paper also claimed the government intends to help so-called ‘generation rent’ by encouraging institutional investment in the private rented sector and improving safeguards for tenants. Javid said the government will work with the rental sector to make three-year tenancies the norm and give renting families security.
However, despite the bold promises the paper received a mixed response from the property industry. Many had heard it all before.
CEO of online estate agent eMoov Russell Quirk said Javid was doing little more than recycling rhetoric and statistics from previous announcements.
“The reduction in time between planning permission and the start of building is such a small aspect of the problem that it will barely make a dent to the overall outcome,” said Quirk, “The move to encourage developers away from low-density areas, whilst helping to fund smaller firms to challenge the big players in the space may incite more competition and more extensive housing projects, but we need these developers to be encouraged to actually build in the first place. Something they currently aren’t doing due to a lack of incentives.”
David Orr, chief executive at the National Housing Federation, was more positive but pointed out that what the country needs now is for politicians to get on with the job and fix the broken housing market.
“Land remains a critical barrier; we know that brownfield land alone is not enough. We urgently need to have honest conversations about how greenbelt land is used,” said Orr, “Measures to boost the scale and speed of supply – through planning mechanisms, tougher local targets and relaxed tenure restrictions – are all extremely positive steps towards ending the housing crisis. We look forward to exploring the detail in the paper itself.”
Regarding the private rented sector, head of lettings at Your Move Valerie Bannister said thousands of people are turning to the private rental sector as the most convenient and financially viable option available to them.
“As it stands, the PRS does not have a ‘one size fits all’ option to meet the needs of both renters and landlords. A mix of tenancy options such as the three-year tenancy are needed in order to answer to the growing number of people who will benefit from consistent, affordable, medium term housing which allow them to plan for the future,” she said, “Three-year tenancies will also benefit landlords as they can avoid the uncertainty of inoccupancy and extended void periods. However, this shouldn’t detract from the absolute need for shorter term contracts, which offer tenants greater flexibility if they are looking to move to a new property or area for a brief period of time.”