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Blog - Published 3rd April 2017

Government white paper ‘Fixing our broken housing market’ – is it radical enough ?

VAT on a property sale

On 7 February, Communities Minister, Sajid Javid, presented to Parliament a white paper covering the government’s proposals for the reform of the housing market.

However, many commentators highlight the fact that the proposals do not go far enough and young people today, trying to get onto the housing ladder, will still find buying their first home a real challenge. The white paper was produced against a backdrop of under supply and increasing prices.

fixing our broken housing market report coverSome of the telling facts include:

– In 2015 the average house price increased in the South of England by £29,000 when the average earnings were £24,542.

– The average house prices costs 8 times the average earnings – a record high.

– The number of home owners aged between 25 and 29 years old has halved since 1990.

– UK housebuilding by population is amongst the lowest in Western Europe over the last three decades.

The white paper highlights four main areas and suggests an action plan to tackle these issues and create lasting reform to get more houses built now and for years to come.

Download the housing white paper.


1. Getting the right houses in the right places

The proposals cover the following:

  • The need to get local authorities to create up to date local plans which do not duck the difficult decisions and apply consistent methodology for calculating housing requirements and legislation to ensure this is reviewed every 5 years
  • Making more land available through use of brownfield sites and surplus public land, whilst emphasising the preservation of the green belt
  • Encouraging higher densities in urban locations.

2. Building homes faster

In this area the government want to:

  • Tackle unnecessary delays in the planning process
  • Enhance local authority planning teams allowing a 20% increase in planning fees from 2017 to help fund this
  • Targeting slow developers with reduced planning permission build out time
  • Removal of excessive bureaucracy in protection of species like great crested newts.

3. Diversifying the market

The Government feel that there is a lack of competition and want to encourage small and medium firms citing the reduction of over 60% in these type of developers in the last 10 years. So they are going to:

  • Encourage smaller builders through the Home Building Fund
  • Boost productivity through the use of more modern methods of construction
  • Support housing associations and local authorities to build more.

4. Helping people now

The need to tackle homelessness now and the current housing shortage has created a plan to:

  • Continue the Help to Buy scheme
  • Encourage landlords to offer longer leases rather than the normal 6-12 month tenancies
  • Tackling the use of leases on new homes to create a ‘second market’ to sell on the ground rents which is not in the best interests of the consumer.

John Biffen - Menzies Accountant

There is no question, that the white paper covers a number of good ideas but doubts still persist over whether these proposals are really going to tackle the housing shortage and give the younger generation a chance to replicate the house owning achievements of their parents.

Should you like to discuss the above in more detail please contact John Biffen on jbiffen@menzies.co.uk or any member of the Menzies property team.

Find out more about Menzies Property and Construction services.

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John Biffen - FCA

Partner

John Biffen is a Partner at the Menzies Farnborough office and specialises in audit, compliance and tax investigation services.