The UK Housing Crisis

Homed:In Blog

Mar 29th 2018

The UK Housing Crisis

Theresa May this year urged house builders to get on their belt buckles and start building. 300,000 new homes every year was the magic number given, and failure to meet such a target could result in sanctioning. Strong words, from a lady oft accused of lacking conviction and opinion. 

But, assuming that the crisis really is 'a crisis', and that new homes are needed fast, then is it a case of hurrying the builders to speed the building process up, or should we be pointing the finger at developers and investors who are simply sitting on the land purchased in a financial move known as 'land banking'? Homeless charity Shelter (whose vision is closely aligned to Crisis - Homed:In's charity partner) earlier suggested that a staggering 1.7 million planning permissions were granted between 2006 and 2014, out of which only 800,000 ever led to being executed. While it's natural to assume that this statistic was largely driven by developers' financial incentive to watch prices appreciate, that's not actually the full story. About one quarter of those permissions were owned by speculators and land traders, not developers. 

Corbyn - an outspoken advocate of overturning the current housing situation - appealed for the 'compulsory purchase orders' of land not being used, by local goverment bodies and without the approval of the land holder. Effective? Maybe. Contentious? Almost certainly. It only takes one developer to rein in their investment for the rest to follow suit. The solution? It can't be said for certain, but one idea is to consider a move towards social housing again: something has not been done since the Thatcher era. Many believe that the problem lies not in the supply of housing - some experts posit that supply has largely been tracking demand over recent years - but in interest rates. The affordability and accessibility of homes by way of the sheer ease of borrowing has pushed prices to where they are today, which is, as we all know, largely out of reach for many, and almost exclusively out of reach for first time buyers. 

What then can be done to address the issue, while experts get to grips with the real force behind the sky rocketing prices? Clamp down on landlords is one idea. Increase taxes for any property found vacant. Set ceiling prices for rents in certain parts of the country. Limit the amount of foreign investment coming into the country that by its very nature strips out what would otherwise be available, affordable homes for the masses. The list is endless. But while these things can all be attributed weight, there's a far more pragmatic and simpler notion that we could all get behind: speculation. Let's stop speculating that house prices will continue to rise, and accept that in our doing so, we are actually creating a self-fulffilling prophecy. Instead, let's internalise the prospect of a stable marketplace, characterised by organic and sustainable growth. Meanwhile, we can only hope that the Bank of England's tightening grip over buy to let mortgages, coupled with the relaxation of stamp duty for first time buyers, is enough to afford our prized young people the right to own property, and that we soon are able to identify where the hole in the burst pipe is, so that we might have a property market that is fit for the future. 

By James Bush


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