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Can this solve the UK’s chronic housing shortage?

The growth of the buy to let market has locked over 2 million families out of homeownership, preventing younger generations the chance to become part of the property owning democracy, according to a new report by the campaigning think tank Onward.

The report authored by leading Conservative MP, Neil O’Brien, argues that the government should limit the demand for property as an investment with a crack down on landlords tax relief for future rented properties. The paper also calls for councils to be given more powers to limit overseas purchases of new homes. At the same time, the think tank calls for a radical set of policies need to be implemented to increase the supply of new homes.

 The report exposes the sheer scale of problems which have built up in Britain’s housing market, driving the decline in homeownership over the last 15 years. New analysis in the paper reveals that:

France has built roughly twice as many new homes each year as Britain since 1970. France built 7.8 million more homes than the UK between 1970 and 2015 – a difference equivalent to every home in Greater London, Scotland and Wales put together. As a result, real house price growth in France has been just half the rate the UK and the proportion of people who spend more than 40% of their income on housing is less than half the rate in Britain. Some densely populated countries like the Netherlands built at an even faster rate than France.

The cost of renting has risen dramatically and nearly half of young men are now forced to live with parents. New analysis from the House of Commons Library included in the report shows that from the 1960s to the early 1980s private renters spent on average around 10% of their income on rent in most of the country, and around 15% in London. Today they spend over 30% and nearly 40% respectively. Meanwhile between 2000 and 2017, the number of 18-30-year-olds living in their parents’ home increased by about 1.1 million. Nearly half (48%) of men aged 22-26 now live with their parents.

Developers and landowners are benefiting most from the current system. Between 1950 and 2012, 74% of the increase in Britain’s housing costs was accounted for by increases in the cost of land. The value created when planning permission is granted overwhelmingly accumulates to developers, meaning communities are missing out on up to £9 billion of land value uplift created each year. Meanwhile many large developments go ahead without anything being contributed anything to the wider community. 7% of developments of over 1,000 homes had no developer contributions charged on them in 2016/17. For developments of between 100 and 999 homes, 26% made no contributions.

The growth of buy to let has locked 2.2 million families out of ownership. If the ratio of privately rented to privately owned homes had remained the same between 2000-2015, and we had built the same number of homes, we would have ended up with 2.2 million more homes in owner-occupation.

The report argues that while building more homes is important, homeownership is unlikely to return to previous levels without action to stem further growth of the rented sector. It notes that while the number of privately-owned homes has grown by 165,000 a year over the last decade, ownership has still declined because this has been outweighed by the 195,000-a-year growth in the number of properties in the private-rented sector.

Source: London Loves Business

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Thousands grapple to secure homes as England housing crisis bites

LONDON, April 12 (Thomson Reuters Foundation) – More than 100,000 households in England could be living in bed and breakfast accommodation and hostels by 2020 due to a critical housing shortage, a study showed on Thursday.

The report by charity group Crisis and the Joseph Rowntree Foundation (JFR) said current trends indicated the crisis would get worse as local councils battled to find homes for those in need.

It said 78,000 homeless households were in temporary accommodation so far in 2018, with Britain experiencing a housing crisis as homebuilding has declined since the 1970s, driving up property prices faster than wages.

“High housing costs, low pay and insecure work are locking people in poverty restricting their choices: with councils finding it harder to help, more families are being forced into temporary accommodation,” JRF Chief Executive Campbell Robb said in a statement.

Government data shows about one in six properties in England, or 4 million homes, are social housing, a figure that has stagnated for a decade.

The Crisis and JFR report, which is published each year, said 70 percent of local councils said they struggled to find social housing for homeless people last year.

About 89 percent of local authorities surveyed said they had also found it difficult to secure private rented accommodation with more landlords not wanting to rent to people on welfare.

“It is pretty much impossible to access the private rental sector. The cost of doing so is prohibitive and the solution is unsustainable because of the massive disparity between LHA (local housing allowance) rates and market rent,” one council in the Midlands said in the report.

Sleeping on the streets – or rough sleeping – has risen in England for seven consecutive years, according to government figures, with more than 1,000 homeless in London and more than 4,100 nationally, a 134 percent jump since 2010.

Britain’s parliament last year passed the Homelessness Reduction Act, which was designed to ensure that local councils increased obligations towards homeless people.

The government has set an ambitious target of building 300,000 new homes a year by the mid-2020s.

Source: UK Reuters