How Theresa May can achieve a truly radical housebuilding revolution

 
Stephen Smith
Property Owners Braced For Interest Rate Hike
Punitive taxes on moving property are holding older people back from downsizing (Source: Getty)

Today, so many leaders are judged on how much they achieve in their first 100 days in office, a concept first associated with US President Franklin D Roosevelt.

But as this milestone passes for Theresa May, what can we expect from the government when it comes to its promise of a radical approach to housing? Well, there are three areas that the Prime Minister must address.

A housebuilding revolution

To be considered truly radical, May’s government must embark on a housebuilding revolution. This means building hundreds of thousands of affordable homes across the country, incentivising private construction companies and mobilising councils and housing associations.

For much of the past five decades, the UK built 300,000 homes a year. Last year saw under half that, and successive governments have simply not prioritised housebuilding, making it harder for the younger generations to become homeowners.

A new agenda is needed to tackle the supply deficit. It must encompass different approaches to construction, create space for thousands of homes on brownfield sites in London, and inject supply into the commuter belts of our cities.

Policy must also focus on boosting social housing to provide affordable homes for renters. That means an end to Right to Buy, as in Scotland and Wales, thus removing a policy which has cut housing for our poorest and fuelled rent and property price increases for years.

Under the previous government, we also saw a layering of regulatory and tax changes on the private rental sector, yet we still don’t fully understand the consequences of these new rules. Now we face further changes to tax relief that will not only affect landlords, but mean higher rent for tenants too. Buy to Let provides housing for millions of people in Britain and often forms the first step to homeownership, so the government must reconsider any additional changes to avoid any further impact on buyer activity in the market.

A modern approach to planning

A sensible approach to planning that makes use of appropriate land is also needed if we are to construct the hundreds of thousands of new homes that the country needs.

Local authorities must be able to directly commission housebuilders, including SME builders, to construct homes in their areas. We also need to make use of reclassified “greenbelt” land and brownfield sites in urban areas to provide the necessary space for these new properties.

Unlocking existing property

Finally, we want to see a concerted effort to unlock the existing housing stock. Legal & General research found that the over-55s own more than £800bn worth of property. That’s 10 years worth of housing supply and in many cases the elderly owners would like to downsize, but it remains too expensive to do so. There is also a lack of suitable properties available that specifically cater for the needs of later life homeowners, compounding this problem.

A cut or freeze on stamp duty for older homeowners looking to downsize would help to unlock this existing supply of homes, particularly in areas where stamp duty can be as much as 10 per cent. Of course, some may not want to move, perhaps because of ties to the family home, but punitive taxes like these can be a significant barrier for homeowners wanting to downsize.

Not only will older homeowners be able to move into properties that are easier to maintain, but it would free up thousands of existing homes for second steppers to make their own.

If the government is willing to make just one of these changes, it has the potential to be a huge positive for the housing market. The government can therefore either procrastinate, resigning itself to past failures, or use the Autumn Statement to bring about a housebuilding revolution that gives all of us the opportunity to own a home.

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