Is the UK housing market broken?

 

Is the UK housing market broken?

With the the Government’s White Paper now having been released lets take a look at some common sense solutions to this much-vexed subject which, after all, is a political ‘hot potato’ and a main plank of the Tory Manifesto.

In short, Cameron’s belief was in the ‘buying revolution’ and May’s, it appears, is in the ‘renting revolution’. Both served their own purpose and form an important part of affordable housing requirement which is so necessary to fulfil the social aspirations of a caring Conservative government with a left wing ‘twinge’, or any other government for that matter.

Frankly, I have always felt that if you have the money for subsidised rent then this could also be put into servicing a modest mortgage as part of the Help-to-Buy initiative and, lets face it, nobody looks after their home better than a home owner themselves and we could deluge ourselves with evidence of this after the Thatcher ‘housing revolution’ in the 80s, where dank, dirty, urine-stained common parts of apartment blocks were replaced by fragrant and welcoming spaces once the properties were owned, rather than rented, by the tenants themselves.

The problem is, and always has been, the lack of affordable homes. It is pitiful that with a burgeoning population, we still only build approximately half of new homes in the UK that were built in Thatcher’s time.

As I have often said the political labyrinth involved in the planning process needs a ‘Trump-like’ radical ‘root and branch’ reform where local councillors, who grant planning consents, are more obsessed with their own political aspirations and nimbyism. The Department of Environment, which is staunchly objective and apolitical, usually adjudicates only planning appeals and this function should be extended to consider straight forward planning applications as well. Local councillors would no doubt be only too delighted to be relieved from this burden, which is rife with all manner of ramifications for them, particularly in the ‘run up’ to a local election.

Osborne’s legacy of high SDLT rates, in the middle to higher sector, has had a very damning effect on the sales of London property, such that developers in the Capital are disinclined to build more stock and this affects the affordable housing quota that is so necessary for the Capital, if not for the whole country.

Not enough to have caused this problem he, at the same time, reduced the Stamp Duty at the lower end of the market in order to bribe the Electorate before the last Election, and this served to excite an already active market and by doing so further disenfranchised the very vulnerable first time buyer, who could not keep up with the subsequent, rampant, inflation that was caused by this action. Let us hope and pray that when Philip Hammond looks at the SDLT receipts, at the next Budget, he will see that the overall ‘take’ for The Treasury is down if you exclude the £1billion surge last year due to the Buy-to-Let tax changes at the end of March 2016, and reduce the Stamp Duty at the middle to upper end of the Market which will give it welcome fillip.

The stifling new regulations, as they apply to the present mortgage lending market, are now so restrictive that buyers find it difficult to obtain funding. At the same time, they can often lose the property that they are trying to buy whilst excessive due diligence takes place. Help-to -Buy is not extensive enough to satisfy demand and meeds expanding. All of this exacerbates the shortage of housing stock, both private and affordable.

Minimising the time delays from the first planning application to the granting of consent and then to the finishing of the development itself, from three years to two years is a good thing but I am sure that ‘canny operators’ will be able to ‘duck and weave’ their way around this requirement, so as to avoid any down sides.

Smaller developers always struggle against their nationwide bretheren to fund their schemes given the constraints on lenders today. If the government could see its way clear to helping this category of developer it would, in aggregate, help to fix the cracks in the housing market.

Local councils need a ‘can do’ default position rather than the openly obdurate approach that is often the case when an application is submitted. Long gone are the days where planning officers, in the 80s, suggested to developers, innovative ways of improving planning consents and by doing so gaining more space to develop. If the increased density of planning applications were to be allowed this would increase the supply of new homes and take the pressure off the encroachment of The Green Belt which seems to be safe under the present administration, for the momemnt.

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