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What next for housing? Marketwatch

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  • 23/10/2014
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Labour's pre-election campaign has ranked help for the housing market high on its agenda.

It commissioned an independent review by Sir Michael Lyons to look at what changes needed to be made in current housing policy to solve the country’s housing crisis.

The findings of The Lyons Review were described as ‘sensible and comprehensive’ by the British Property Federation and if followed, Labour said will allow it to achieve the target number of homes needed – 200,000 a year.

But do the recommendations go far enough? Mortgage Solutions asked a panel of experts to look at ‘The Review’ and whether it had the teeth to deliver the rescue package the UK desperately needs.

Paul Broadhead, head of policy at the Buildings Societies Association, dissects the detail in The Review and looks at what it means for the housing market.

Stephen Smith, director, mortgage club and housing, Legal & General Network, said The Lyons Review holds good ideas but outlines areas which need further development to solve the country’s housing crisis.

Charles Haresnape, managing director, mortgages and commercial lending, Aldermore, looks at how the policy may be used to bring empty homes back into use.

paul-broadhead-2011Paul Broadhead is head of policy at the Buildings Societies Association

The Lyons Housing Review is a welcome contribution to the debate about boosting the supply of UK housing.

For decades governments have collectively failed to take housing seriously, resulting in the current situation where many households struggle to either rent or buy due to rising costs. As the report makes clear, housing has not been seriously addressed in party manifestos since the 1960s and 70s.

Lyons is recommending root and branch reform to ensure we can build a minimum of 200,000 properties a year by 2020.

Notable recommendations included:
• Setting up a cross government Housing Task Force to ensure a co-ordinated approach on housing supply
• Reforming Section 106 contributions
• A package of measures to support small and medium sized builders
• Boosting custom and community building
• Enabling offsite house building to play a bigger part in the creation of new homes

It also calls for new departments to analyse the market and refocus existing bodies like the Homes and Communities Agency; push through a new Housing and Planning Bill with the necessary powers for housing growth areas; and updating the outdated legislation for Compulsory Purchase Orders.

The report only recommends that the position of housing minister attends Cabinet rather than as a full blown secretary of state, which is something the BSA has long been calling for.

But it’s a step in the right direction and clearly is a sign of the growing importance of housing politically as an issue.

While the Lyons Housing Review was commissioned by the Labour Party, its 39 recommendations could be implemented by any party and the report includes a 10-point guide to delivering them.

Housing needs to be a key priority for whoever gets voted in next year.

In 2004 the economist Kate Barker wrote her seminal report on the housing market which provided extensive recommendations about boosting housing supply. 10 years on we now face a full blown housing crisis. It will be nothing short of a national disaster if by 2024 we’re still unable to build the volume of properties this country so desperately needs.

landgstephen-smith

Stephen Smith is director, mortgage club and housing, Legal & General Network

We need to build more houses. Over the past 25 years successive governments have failed to address the issue and that has left the country with a chronic shortage of homes.

Housing completions have fallen to historically low levels of around 125,000 per year compared to post-war highs of 400,000 and the National Audit Office data showed there has been no consistent growth in private housing since 1970. In simple terms we risk leaving our children with a legacy of £1.3trn in government debt, £50bn of student loans, poor job prospects and unaffordable homes if we don’t do something now.

That’s why it was pleasing to see the recent publication of the Lyons Review. The fact that all the main political parties seem to want to address the issue is a good sign. The commitment to achieve a building target of 200,000 new homes a year was encouraging. We welcome the emphasis on construction, the pressure on councils to produce homebuilding plans and the promise to help first-time buyers.

However, as outlined in our ‘Lets House Britain’ report, more still needs to be done. Our 10-point plan calls for 250,000 new homes to be built a year. We want to see urgent planning reform, an increase in solo dwellings to meet new demographic trends and affordability to be addressed through longer dated mortgages. There needs to be more mortgage-backed securitisations and more rent-to-buy formats. There also needs to be a review of social housing, a move to unlock housing wealth through equity release, help to allow retirees to ‘rightsize’, consolidation and scale in the private rental market and a more professionalised private rented sector. The Lyons Review is very encouraging but there is more work to do.

charles-haresnape-md-residential-mortgages-aldermore-a41cCharles Haresnape is managing director, mortgages and commercial lending, Aldermore

The housing crisis is arguably one of the most pressing issues we are facing in Britain. It is not only affecting the growing levels of homelessness and people’s ability to find somewhere affordable to live, but ultimately it could also hinder the growth of the UK economy if we don’t tackle the root of the problem now.

The three central policies of The Lyons Review seem sensible enough; power for local communities to build homes in place people want to live; councils to produce a homebuilding plan and allocate sufficient land for development; and first-time buyers from the area are prioritised for access to any new homes.

The review targets issues that, in my view, are holding back housing developments. The archaic planning process, for example, is too slow and obstructs councils’ ability to process and approve applications.

The review also targets the fact that some councils are failing to build, despite the incentives offered by the New Homes Bonus. Any introduction of policy should be implemented in a way that prioritises bringing empty homes back into use and they shouldn’t be afraid of building on greenbelt land.

While the review appears to be a good start in tackling the housing crisis, the 200,000 per year target remains a challenge and is below the estimated number of new homes required to meet demand. A review of this sort is just a starting point for tackling the crisis. Real action needs to be taken, now and the pledges already made at the party conferences need to be honoured post general election.

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