Sajid Javid, secretary of state for the Department for Communities and Local Government, has unveiled the government’s Housing White Paper.
He told the House of Commons that since 1970, house price inflation in Britain has far outstripped the rest of the OECD and that
the market was heading in the wrong direction.
“I’m talking about the first-time buyer who’s saving hard but won’t have enough for a deposit for almost a quarter of a century,” he said. “Or the couple in the private rented sector handing half their combined income straight to their landlord.”
To meet demand, the government needs to deliver between 225,000 and 275,000 homes every year, he said.
The government said it was going to introduce a new way of assessing housing need, placing the onus more on local authorities.
To speed up building, it would also simplify the completion notice process, make the planning system more open and accessible and improve the co-ordination of public investment in infrastructure and support timely connections to utilities, Javid claimed.
Finally, he wants to make it easier for small and medium-sized builders to compete.
John Heron, managing director of Paragon Mortgages, said: “Paragon have long called for a broad and strategic view of UK housing policy that takes a tenure neutral approach and recognises the vital role played by the Private Rented Sector (PRS). We welcome today’s White Paper as being a good start in developing such a strategy, particularly the plans to engage with local people and smaller house builders who will help to increase the supply of new homes.
“We are disappointed however that the government is pushing forward with plans to reduce the amount of mortgage interest tax relief available to landlords – which comes on top of a reduction in the wear and tear allowance and an increase in stamp duty for landlords. These policies have already resulted in reduced investment in the PRS over the last 18 months and will continue to do so and this doesn’t sit well with the White Paper’s call for increased supply to the PRS.
“The vast majority of PRS properties are owned and managed by private landlords with small portfolios, often consisting of one property. The government’s proposals seem to suggest that institutional investment can meet all the growth required to satisfy tenant demand and replace the private landlords who have exited the PRS due to the government’s tax strategy. There is a lack of joined up thinking between the Government’s housing policy and its tax strategy.
“Institutional and private investors in the PRS can coexist and be mutually supportive but we need a policy environment that reflects the vital contribution which both can make.”
Steve Ellis, managing director of Legal & General Home Finance, said it was disappointing to see no mention of support for older homeowners in today’s Housing White Paper, particularly given the recent speculation about support for downsizers.
He said: “Moving property in later life is a path that many people consider in their plans as a means of accessing cash for retirement, but without support high stamp duty costs and a lack of suitable properties will continue to make it difficult to move.
“It is vital that the market now works to raise awareness of the many other options open to older homeowners to help them plan their retirement. Whether it’s a lifetime mortgage or refinancing an existing loan to help free up more cash, as downsizing continues to be a difficult option, older homeowners approaching retirement would be prudent to take a more holistic view of their assets and speak with an adviser to find the right solution for a happy, financially stable retirement.”