One of the biggest news stories from this year’s Autumn Budget, announced by the UK Chancellor Philip Hammond earlier this month, was that first-time buyers are going to be given a leg up on to the housing ladder through a major change to the rules on stamp duty. The Chancellor announced that the Government will abolish stamp duty on homes under £300,000 – a move that could have a huge impact on many people who are trying to purchase their first home.
Great news then – and the kind of boost that the housing market clearly needs. But, we’d argue that there is much more that still needs to be done to make housing affordable for the vast majority of people in the UK. For us, the far more fundamental problem lies in our country’s planning laws – and a system that has allowed land prices (particularly for land with planning permission) to spiral out of control. So, how can we start to fix the UK’s growing housing problem?
Time to free up our planning laws
At present, 90 per cent of our country’s population lives on just 9 per cent of the land we have available. This situation means that there is a huge amount of potential space there that simply isn’t being used. Prices on the little land that is available to build on have skyrocketed, and this cost is then passed on, at the end of the chain, to buyers. The south of England suffers particularly badly from this problem, where land can sell for up to £2m per acre if it has been granted planning permission.
So, we have a situation where we have the space to build new properties, that are affordable for those who need them most – but a system exists that isn’t allowing the market to take advantage of this. This isn’t about building in sensitive areas, or losing our nation’s valuable green space – instead, it’s simply about increasing the amount of space we have available to build on. If land prices go down a little, as a result of more land being available on the market, it should lead to more affordable house prices for buyers, as the cost of land makes up a considerable proportion of the sale price of a new house.
Too many properties sitting empty
There is also a huge opportunity to use more of the houses we already have available. Across London alone, over six months in 2016 there were 19,845 homes sitting empty – the equivalent of £9.4bn-worth of property, at current London prices. Of course, London and the south east aren’t the only culprits, and indeed many of the local authorities in the Midlands and the North make up the areas with the highest number of empty homes.
The Government and local councils have done a lot of work in this area to reduce the number of houses sitting empty, in particular by reducing the tax advantages of leaving a property unused. As a result, there are some bright spots – not least Manchester, where they’ve seen a huge fall in unused homes in the last ten years – dropping 88% to 1,365 properties.
Ultimately, the housing problem this country faces is a complex issue, with a growing population in an ever-diminishing amount of space. Yet the potential is there to fix many of the problems, though a smarter approach to planning laws that make it easier for developers to build affordable homes, and a renewed effort by all parties to free up the housing stock we already have.