The report from the London School of Economics (LSE) commissioned by the Family Building Society suggested the use of existing stock, encouraging downsizing and changes to property tax.
Speaking on a presentation to announce the report, Mark Bogard, CEO of Family Building Society, said the number of housing ministers appointed in government was “unacceptable”. He said there was a need for integrated policy and a shared objective across politics and proposed that housing become a great office of state.
Referring to Lord Mandelson who wrote an introduction to the report, Bogard said a guiding hand was needed to ensure “policies are consistent and do not pull in opposite directions. This must come from the top of government. The Housing Minister needs the power to deliver. The Housing Minister should be one of the great offices of state”.
Also on the call was Tony Travers, professor at LSE, who said the “political salience” for housing was “low”, which gave the impression it did not matter and was not that important.
He also said there was a lack of imagination regarding stamp duty and politicians preferred to keep it rather than reform it.
Optimise existing stock
Bogard said the government could consider optimising existing stock by encouraging older homeowners to downsize.
In the report, it is suggested this could be done by waiving stamp duty for the over 65s which would free up moving costs and increase tax revenue for the Treasury.
Bogard said politicians found it easier to focus on the demand side of housing by creating policies to boost house building but said there needed to be a strategy to make the most of current homes.
The report noted that local housing targets were only advisory, and the government had failed to build 300,000 homes a year as proposed.
Tony Crook, professor at the University of Sheffield, who authored the report, said better use needed to be made of the housing the UK already had by taxing the existing stock differently. He suggested aligning council tax to property values, adding: “Those living in the most expensive homes pay more, with funds easing local authority, finance, and also help to fund more social housing.”
Christine Whitehead, professor at LSE, who also authored the report, said such a change could provide a flow of funds to local councils.
Whitehead said a joined up approach for housing was needed and getting governmental departments to work together was more important than getting politicians to work together.
“What needs to be done to help all the relevant departments, which is not just the Treasury, it’s not just the Bank of England, it’s not just the DWP [Department for Work and Pensions]. It is many departments, 9 of them at the last count, which need to work together with local authorities and the private sector to work to the same strategy,” she added. Whitehead said each department only had an understanding of their own position.
Policy proposals
The report also recommended stabilising the private rental sector, as it suggested that rising costs were resulting in higher rental prices which made it harder for renters to raise a deposit.
It said the taxes imposed on private landlords in the UK made them the “most tax disadvantaged in all developed economies”. The report said landlords were considering exiting the market because of this, despite demand already outstripping supply.
The report said a stable private rental sector for all incomes was required.
It proposed the introduction of longer term fixed mortgage rates, saying this would provide stability in the market. However, it noted that being locked into long term debt could have financial implications.
The report said the number of first-time buyers would fall unless the government developed new initiatives to support the demographic. It said any support should boost supply, rather than prices.
Changes to the planning system were also put forward, such as reducing the time it takes to get individual permissions processed.
A ‘consistent and coherent approach’
Whitehead and Crook said: “Without a more consistent and coherent approach housing conditions can only get worse. What we need is a strong government working across all government departments as well as private and public sector housing organisations with all following the same road map. Unless they do this, opportunities that can help frame and realise a positive future will not be grasped.”
Bogard said: “Solving the housing crisis is not that hard if government works with other stakeholders and pursues coherent policies introduced over a sensible timescale. And some things that would make a big difference could be done immediately.
“The government’s latest long-term plan for housing does not address the issues highlighted in our report. Specifically, there is no mention of making the existing stock more efficient, creating more social rented housing, proper support for home ownership, creating a more effective and affordable rented sector or setting achievable targets and updating local plans to reach those targets.
“There has to be greater coherence, consistency and resilience in housing policy which is why we need a Minister of Housing as one of the great offices of state – not a repeat of the shambles of the last 25 years.”
