The housing crisis that the government faces

Another day another budget and it certainly was a busy one. As an individual there was some good news and some bad news but the listed housebuilders were in for a hit with up to 7% wiped off share prices on the back of news that tax relief on mortgage payments is to be restricted to the basic rate of tax for those buying to let. It’s like full circle given the share jump they received following the Conservatives forming a government.


This recent fall does come off the back of Mr Osbourne committing £6bn to Help to Buy until at least 2020. The first chunk of £1.5bn has been delivered to the Homes and Communities Agency and is ready to roll. The scheme that gives equity loans to help individuals get on the property ladder is boosting the economy by driving house building. The key point I see is that by committing to 2020 you provide the certainty to housebuilders to recruit which benefits their own supply chain too.


But while housebuilders’ share prices have risen sharply on the election result, the Conservative Party manifesto contained no pledge to meet rising demand by setting a target to build more homes, as called for by many in the sector and this is still the case – unless it is addressed in the Housing Bill.


Certainly there is little doubt about the scale of the housing crisis that the government faces. The latest housing supply projections show that 210,000 new homes are required across England each year to cope with the number of new households forming every year. Once the accumulated backlog of past undersupply is factored in, housing pressure groups agree that the UK needs at least a quarter of a million new homes each year. Just 141,000 were built in 2013/14.


Against this backdrop, many people are putting off setting up home altogether. Figures published by the Office for National Statistics earlier this year showed that nearly a third of a million households contain more than one family.


Among young adults, nearly half of whom live in private rented accommodation, the proportion of 20 to 45 year olds putting money aside for a home deposit was down by 6% to 43% last year, according to a survey published last month by the Halifax bank. Home ownership is at its lowest level since 1985, according to recently published Department for Communities and Local Government figures.


So what do we need well its simple (I think):

• National housing target;
• Housing minister to report on progress on nationally significant sites and against the housing target; and
• More funding for social housing

Feel free to contact me 0113 288 2276 or lee.a.wilkinson@uk.pwc.com if you wish to discuss this blog or anything relevant to property and construction.

Enjoy the weekend

Lee