The LSE report A More Coherent Road Map 2: Using the Existing Stock More Effectively, commissioned by Family Building Society, named three actions that could free up more homes.
It suggested getting rid of stamp duty for older homeowners, taxing second homes and short-term lets to make more properties available, and treating private landlords like other businesses.
Introducing the report, Mark Bogard, chief executive of Family Building Society, said there was yet to be a “coherent policy” around housing and the government focused on new build, which was “1% of what is at stake each year”.
He added: “Optimising the use of the other 99%, the existing stock, matters more.”
The report also recommended the support of shared ownership, improvements to the leasehold system and helping people to become homeowners, where it will lower costs for households and the government over the long term.
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Further, it suggested restructuring council taxation to stop poorer households paying relatively high council tax and people in higher-priced homes paying proportionately less. It said council tax should be “more directly related to the value of the dwelling”.
Using existing homes better
The report said existing homes could be better utilised if older homeowners were encouraged to move through a stamp duty exemption, making more homes available to families and other buyers.
It also said this would require more suitable housing for older people.
It added: “Local plans should make policy provision for dwellings that are suited to the needs of ‘downsizers’. Much of such accommodation could be in the form of conversions in or near city and town centres with good local services, as is found in other European countries.”
The report said there was a case to remove stamp duty altogether, as this would support economic growth.
“The basic reason is that stamp duty presents a significant disincentive to moving – so people are put off making job-related moves, which would benefit both the economy and the individuals.
“More moves also mean more mobility-related expenditure with significant benefits in terms of both productivity and demand,” it added.
Further, by controlling short-term lettings, particularly in tourist areas, this would boost the availability of longer-term lets and private rented homes.
“The most obvious means of dealing with this issue is to require planning permission and to charge council tax accordingly,” the report said.
Treating private landlords like businesses
It continued on to say the country was “short of private tenancies” and the tax regime should be modified for private landlords to encourage more lettings.
It said comparative studies across Europe showed that when individual landlords were treated like businesses and allowed to net off their costs against income at a marginal tax rate, the private rental market worked better.
“Given the increased importance of private renting in an environment where people are finding it extremely hard to raise the deposit to purchase, a shift towards treating individual landlords more as businesses could help increase investment, making more properties available to rent, incentivising improvements and helping to stabilise rent levels,” the report added.
Too much emphasis on new build
Christine Whitehead, a professor at LSE who helped write the report, said: “The Labour government’s current housing policy has put almost all the emphasis on new build. Yet even when their National Policy Planning Framework is fully in place, it is unlikely that anything like 300,000 new homes per annum will be added to overall housing supply, at least during their first term.
“It will take time to bring green and grey belt into development, except where there is unused infrastructure available. The development of new and extended towns, while a very popular policy offering significant long-term potential, is unlikely to be fully operational within the next decade.
“A particularly difficult issue is how social and affordable housing is to be funded. A major problem is that housing associations do not have the capacity to purchase new S106 homes and without that cash flow, developers are slowing the output of both market and affordable homes, especially in London.”
She added: “While we clearly need all the new homes we can get, improving the use of the existing stock has far more immediate potential to improve housing conditions.”
Bogard added: “This latest government has put great store in housing as a key engine for the growth so very badly needed in the UK economy and to support their spending objectives. But we have not seen a coherent policy, yet.
“It has focused on new build, and, as this report highlights, this is only 1% of what is at stake each year. Optimising the use of the existing stock, which makes up the other 99%, matters far more.”
Bogard said: “As this report shows, there are actions that can be taken immediately to improve the situation. Going forward, we need a coherent policy, joined-up government thinking and oversight of delivery of the policy objectives.
“Housing matters to everyone, every night when they go to bed whether they own or rent, private or social. It matters to people for their children. It matters to the elderly that they live in suitable accommodation.
“Politicians often seem to focus on ‘legacy’ – what greater legacy could any politician have than laying the ground for starting to sort out the mess that housing policy has been for so long in this country?”
Today, it was announced that Bogard had joined a new independent housing policy committee, chaired by Sir Vince Cable.
