A new report by the cross-party House of Lords Economic Affairs Committee has strongly criticised the government’s housing policy.
The committee argued that the housebuilding target must be increased by 50% (to 300,000 homes each year) to successfully tackle the housing crisis.
The report, titled Building More Homes, said the government were guilty of setting a new homes target which will fail to meet the demand for housing or slow the rate of house price rises, as well as limiting local authorities’ access to funding to build more social housing.
The committee also said the government’s policies on housing had created uncertainty in an already dysfunctional market through regular changes to tax rules and subsidies for house purchases, in addition to reductions in social rents and the expansion of the controversial Right to Buy scheme.
All of these changes, the report says, have helped to reduce the supply of homes for those who need low cost rental accommodation.
What’s more, the report argues that the government’s narrow focus on home ownership has neglected those who decide to rent their homes. While there have been attempts to improve the chances of first-time buyers, there has been very little to support those who have no desire to own and would rather rent on a long-term basis.
In order to address the housing crisis, the committee put forward a number of wide-ranging recommendations which they believe the government could successfully implement.
These included restraints on local authority borrowing being lifted, to fund social housebuilding in the same way as other building programmes are funded.
This would once again allow local authorities to become one of the major housebuilders – especially of social housing – in the country, a role it historically undertook.
The committee also said council tax should be charged on developments that are not being completed quickly enough, the use of public land should be maximised and that local authorities should also be given the powers to increase planning fees.
Lord Hollick, the Chairman of the Committee, said the UK is facing an acute housing crisis, with both home ownership – and increasingly renting a home – becoming unaffordable for more and more people.
The only way to address this, he says, is to dramatically increase supply, with 300,000 homes a year needed for the foreseeable future – something, the Committee believes, the private sector alone can’t provide.
While the government have introduced schemes like the Help to Buy ISA, starter homes and Shared Ownership to try and improve the prospects of first-time buyers, they have been criticised for not doing enough when it comes to affordable housing and building enough new homes.
Equally, there has been little focus – with the exception of Build to Rent on helping the private rented sector. In fact, many landlords and buy-to-let investors believe they have been unfairly targeted with hikes in stamp duty and proposed cuts to mortgage tax relief as the government have attempted to clear the path for first-time buyers. But, as the Residential Landlords Association (RLA) has pointed out, first-time buyers and landlords are very rarely competing for the same properties.
So, instead of helping first-time buyers, the government’s attack on the buy-to-let sector has harmed a market that is in need of more houses than ever – after all, demand for homes in the PRS is at an all-time high and only going one way in the near future.
Moving forward, the government face the twin challenges of increasing home ownership while not penalising those who want to rent for the long-term – and the people who provide this housing – too harshly.
The recommendations put forward by the cross-party Committee would be a start, but there are clearly many challenges ahead.