Low stock, poor planning and buy-to-let investing are the biggest issues facing the housing market, according to new research from think tank Onward.
Its report, written by Neil O’Brien MP, calls for councils to be given powers to build new villages, towns and cities instead of undertaking piecemeal construction around the periphery of existing settlements. The report also calls for more power for central government to build new ‘garden cities’ alongside better integration of transport and housing planning.
Mr O’Brien’s report is also damning of the buy-to-let market, calling it the “elephant in the room”. He writes that “limited housing stock is too often used as a speculative or investment asset rather than a home”.
He continues: “Increasing the supply of new housing on its own will not be enough to reverse falling home ownership unless new homes go to first-time buyers instead of investors. We cannot continue to incentivise the growth of buy-to-let and the private rented sector in the way that we do now.”
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The report calls for further changes to be made to the tax system to disincentivise buy-to-let in order to curtail demand for housing as a ‘speculative asset’. This includes ending the capital gains tax (CGT) exemption loophole for primary residences and further reforming mortgage interest relief for landlords. The report also recommends new powers for local councils to prevent overseas purchases of new homes.
In addition, the think tank recommends the creation of a ‘Homes for Younger People (HYP)’ initiative with rents 10% to 20% below market prices in order to “help get them off the treadmill of renting and onto the housing ladder”. The report recommends offering half a million ‘HYP Loans’ to help young people who can afford a mortgage but cannot afford to save for a deposit.
Mr O’Brien says: “In Britain, a generation are being denied the chances to get a home which older people took for granted. At the same time, we are building too much that is ugly, losing too many of the green spaces that people value the most, and stoking opposition to development. The solution to one problem is the solution to the other.”