“The housing market isn’t a proper market as we know it. It doesn’t operate like a market. To be blunt, it is a broken market. It is fixable but it’s definitely not operating like a market would”.
These were the words of Ben Everitt MP – leading Conservative backbench voice on housing policy – at WA's event last week on how to create a thriving housing market that works in the interests of consumers and the industry.
The panel discussion brought together Ben; Melissa Lawford, The Telegraph’s Property Correspondent; Simon Brown, Chief Executive, Landmark Information Group; and Angus Hill, Associate Director at WA who led their recent successful campaign to secure an extension to the Stamp Duty holiday. The webinar can be rewatched by clicking here.
So how can this ‘broken market’ be fixed and what can the industry do to shape government’s thinking as it tries to drive better outcomes? Here are our four key take-aways:
1. Housing supply remains the primary challenge, but it is politically difficult.
Successive governments have set ambitious targets for new homes, which they have failed to meet. The fundamental challenge remains that the UK needs more homes, but changes – for example to planning policy – intended to speed this up or focus building in particular areas has historically met fierce resistance, especially in the South East. The government’s upcoming Planning Bill is likely to see a repeat of this, with a series of showdowns this Autumn. The crumb of hope for the government is that its new electoral coalition – meaning it’s less reliant on votes in London and the South East – gives it slightly more breathing space.
2. Taxation is a big lever controlled by government that can shape how the market operates.
The success of the recent Stamp Duty holiday has shown that changing property tax policy can significantly impact transaction activity: it has been proven as a mechanism that works, with the reduction creating a more fluid market. The catch is that this is revenue which HM Treasury is highly reluctant to miss out on, and so only wants to use it judiciously and in a targeted way.
3. It is not just the speed at which homes are built that is failing; how homes are bought and sold is broken and needs reform.
It is clear that the current home moving process causes significant stress for movers. The time it takes – on average nearly six months – from wanting to move to completion, and the significant risk of transactions failing, means this isn’t an easy experience for consumers. Whether it’s through government policy reform, or industry innovating and taking the initiative itself, it’s clear that how homes are bought and sold is ripe for reform.
4. Building houses for sale isn’t the only solution; social housing providers have a key role to play.
The government is strongly committed to home ownership. Talking about getting First Time Buyers on to the housing ladder is politically attractive and rewarding. But it’s unlikely to be the best policy solution if the objective is to create more homes that provide better places to live. Social rent homes should be a key part of the mix, but historically have lost out to supply side interventions – such as Help to Buy – designed to get young people onto the housing market.
Two points came through loud and clear in this week’s discussion that shape these priority areas.
Firstly, housing fundamentally isn’t just about stats and targets; it’s primarily about people and their key life moments. It’s about creating safe spaces that allow people to achieve their ambitions and their life plans, whether that’s moving for a new job, finding a bigger house that allows families to grow, or downsizing to give people dignity in retirement. To get cut-through in the policy debate, the industry can’t just talk about numbers and stats, it needs to relate it to people’s real lives.
Secondly, housing is highly political. Policy proposals can be well thought through but need to be able to survive contact with the political reality. In many areas of this debate, there are key political trade-offs: to take just two, reforms to planning policy risk have electoral implications in the Conservative Party’s southern heartlands, and reforming property tax leads to an immediate loss in revenue needed to fund vital public services. Understanding and reflecting the politics around this issue is critical for those wishing to shape this market.
Creating a thriving housing market is possible, but it will not be easy. It will require partnership between industry and government, and a recognition that a holistic vision is required to avoid tweaks in one area inevitably having implications elsewhere.
by Angus Hill, Associate Director