Trend: Housing White Paper – Good things happen to those who wait…?
- The Government’s Housing White Paper was finally published earlier this month. The consultation document that outlines the Government’s thinking on how to repair ‘the broken housing market’. However, the Housing White Paper has faced criticism by many housing experts. They claim the government is dithering rather than freeing the regulatory shackles to promote house building. One can empathise with those who wish for a more expedited process. After all, it is a supply side issue that desperately needs to be solved.
There was a clear move away from previous pledges that focused solely on driving home ownership levels upwards. Housing of all tenures has a part to play with support for large-scale institutional investment in the Private Rented Sector (PRS). The UK enjoyed a house price inflationary environment for the past few years. A build-to-sell approach is now expected to be outweighed by a build-to-rent approach for many developers. Getting a strong operating partner is key to tapping into greater institutional PRS appetite.
- The government had indicated several years ago that it was targeting 200,000 homes to be built per annum. The White Paper has now increased this target stating ‘225,000 to 275,000 or more homes per year are needed to keep up with population growth and start to tackle years of under-supply.’ Such targets need be combined with reductions in red tape around brownfield and greenfield sites. Did this occur?
- Status quo was maintained with regards to the Greenbelt. Some anticipated increased scope for brownfield site use within the Greenbelt, particularly adjacent to existing communities or transport infrastructure.
- There was no mention of stamp duty, which has increased for all home buyers over the last two decades and reflected in stamp duty receipts. HMRC reported that it had received nearly £2.4 billion in 4Q 2016. The 2016 policy imposing greater stamp duty via a 3% surcharge on 2nd+ home buyers has already had a marked effect on the housing market, particularly the higher priced homes brackets. Another key question has arisen as to whether buyers should pay or if sellers should now assume the stamp duty burden?
- Finally, there was a U-turn on Starter Homes – the affordable housing scheme proposed by David Cameron in 2014. They will still go ahead as part of a wider measure to boost all forms of Affordable Housing.
No doubt, it is an ambitious, daunting and urgent project to correct the current severe and growing supply and demand imbalance. It is a much-needed focus given the challenges faced by many prospective home-buyers that have inherited strong home ownership ideals. They have been simply out priced. However, time will tell whether the suggestions provided are the answers to fix the supply-side in the overwhelming supply and demand imbalance. Taking too much time may not be the answer and politically-driven digs at key players, such as buy-to-let investors and developers, within the property sector is counter-productive. Working with both established and new entrant developers and property investors should be the focus to help boost housing supply.