How can the housing market help to rectify the economic situation in the UK? We asked a number of experts for their opinion, which you can read about below.
Dr Richard Wellings (Institute of Economic Affairs)
Housing is one of the key components when talking about economic recovery, but in the UK there are so many rules and regulations that it makes it very difficult for anyone to develop a property. We need to ensure properties are safe, but we also need to make the process possible for anyone wishing to build a property. I am also talking about self-build projects here, which could help to reduce the public’s dependence on mortgage loans and other forms of credit issued by the government.
The idea behind local housing associations is in theory a good one, however these projects are mainly aimed at low income groups who are dependent on government handouts. If our economy is going to recover, we need to reduce this dependence. To do this, private accommodation needs to be prioritised, as it targets employed individuals that generate money for the government.
To further reduce reliance on government funding, private investment should be encouraged. In the last few years people have generally been put off private investment as it has been difficult to achieve respectable returns, due to the high costs involved.
Professor Kenneth Gibb (University of Glasgow)
If done properly, the construction of new property is indeed important for the economic recovery of this country. However it needs to be built in areas where there is sufficient demand. Not only that, but mortgages also need to become more accessible and transaction costs need to be lowered, otherwise private construction companies will continue to find it difficult to finish developing sites. For this reason, initially at least, affordable housing should be emphasised.
Additionally, local partnerships should be encouraged, where resources and expenditure can be kept to a minimum without affecting the development of new housing.
Steven Howell (Localis)
Current government restriction on the construction of new housing by local authorities is preventing the market from progressing. These restrictions should be lifted, or at least made more lenient. If this was done, the housing market could help to revitalise the UK’s economy from the ground up.
Jim Bennett (Homes and Communities Agency)
Across the country there are countless sites that would be perfect for housing development, but can’t obtain the various permissions due to lack of infrastructure. By ploughing money into developing infrastructure in these areas, new homes could be built in locations that have a high demand for housing.
Support the Get Britain Building initiative, which will provide the funding required to re-commence construction work that has been put on hold. The investment is over £500 million, but it is an investment that can be recouped and is intended to reduce the risk that is shouldered by private developers.
Tim Morgan (Tullet Prebon)
I am firmly behind implementing a solution that is backed financially by the government. The amount of personal debt in the UK has doubled over the last decade, and many people are now unwilling to risk taking on more debt, which includes mortgages. Once the economic situation has improved, the housing could be privatised by incorporating a “right-to-buy” clause into contracts.
Since 2008, the number of housing starts has dropped by 100,000, which is a clear indication that we have the ability to be able to improve construction efforts.
Funding could be raised by the government through the sale of valuable social housing and by making it possible for local associations to borrow money against future rental incomes. So rather than having to raise the approximate £10 billion required to fund an increase in construction rates, only £4 billion would be required, which is a relatively insignificant sum when the potential benefits are taken into account.
Kevin Matlon (Social Enterprise & Labour Councillor)
Local authorities are not currently able to invest, due to restrictions imposed by banks they have existing loans with. These authorities are being forced into accepting unfavourable loan conditions if they wish to borrow more credit to build new housing. This is counterproductive to these authorities and the public, and needs to be stopped.