From the Government’s recent Housing White Paper (you can read our overview here), it remains that more must absolutely be done to address the housing shortage we face. As always, it is never just one or two factors that create the crisis that we currently endure in the housing market.

There are a range of reasons for the problem.

1. Availability of land- local authorities being slow to release brown field sites for redevelopment, the planning process, developers hoarding land waiting for prices to rise and green belt and NIMBY issues. Lack of infrastructure is often cited as a reason not to allow development. The Local Authority spending cap inhibits them from building more affordable homes (muddled thinking here- needs a policy change). Some of these issues are addressed in the White Paper although without clear resolution.
2. Availability of low cost rental accommodation- Partly caused by 1) and by lack of rental regulation. In the private rental sector there are no significant controls on private landlords from charging any rent they want. Short term tenancies give tenants no bargaining power- pay the higher rent or leave. In the South East this has led to rent escalation at many time the rate of inflation. The Government has consistently failed to build enough affordable rental accommodation leading to the current imbalance between supply and demand. The solution is as a priority to build large number of low cost rental accommodation and set a fair rent that people can afford. Thereafter offer 9-year leases with 3 year tenant breaks. Rents would be pegged to RPI. This is the French model. BTW our Europeans neighbours are building new homes at many times the UK rate.
3. Funding of new development- There is not enough funding available particularly for affordable housing. A longer-term financial product where institutions and pension money can be deployed for a fair return needs to be developed. Some tax incentive may be required but so what. Renewable energy gets tax breaks, why shouldn’t affordable housing?
4. The Buy-to-Let market needs to be lightly regulated in order to reduce rental inflation. Longer term tenancies would help. This may not be politically popular, but it’s necessary.
5. More Government incentive for affordable housing for sale. New incentives for first time buyers and modest earners. Tax breaks, assistance with deposits and discounts.

In a society where working people are paying rents representing up to 50% of salary and then high unsubsidised travel costs on top, something has got to give.

The Government is constrained by budget considerations. To solve the housing crisis more funding needs to be devoted to the sector. With sufficient political will they could achieve the required objective. In the 1950s and 1960s 2.5 million people were rehoused.

If it’s a priority it’s achievable.