Housing affordability: government announcements and other reports and policy papers: December to February 2019

English Housing Survey

The latest EHS shows no significant overall change in owner occupation over the past five year (at 64%), although here are now more outright home owners and the proportion of 35-44 year olds in owner occupation has increased to 57% (although it was 71% in 2007/08). The proportion of social renters who expect to buy has fallen (to 25%) and the proportion of private renters who expect to buy is unchanged (58%).

After a period of substantial increase, the proportion of households in the private rented sector has not changed for five years. Throughout the 1980/90s the proportion of PRS households was steady at around 10%. While the sector has doubled in size since 2002, the rate has hovered around 19/20% since 2013-14. However, there here has been a considerable increase in the proportion of 35-44 year olds in the PRS (from 13% in 2007/08 to 28% in 2017/18).

The proportion of households in the social rented sector has not changed for over a decade (17%). However, the composition of the social rented sector has changed in recent years. In 2008/09, the social rented sector accounted for 18% of households with 9% renting from housing associations and 9% renting from local authorities. In 2017/18, 10% rented from housing associations and 7% from local authorities.

The Survey also showed: the highest rates of overcrowding in the social rented sector (8%); the highest rates of under-occupation among home owners (54%); and a recent stalling in the decent homes improvement rate.

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Slowdown for the PRS

A report by ARLA Propertymark claims that private landlords across the country (and especially in London) have been pushed out of the market by increasing costs and legislation, and new investors have been deterred from entering. According to the ARLA a continuation of this trend “will lead to more competition for properties and push up rents on good-quality, well-managed properties, and leave the vulnerable and low-income people which rent controls are designed to help, in the hands of rogue and criminal operators.”

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Stamp duty surcharge 

HMRC is seeking views on its Budget proposals to for a 1% Stamp Duty Land Tax (SDLT) surcharge on non-UK residents purchasing residential properties in England and Northern Ireland.

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Housing market outlook

RICS housing market report suggest overall sales volumes to weaken by around 5% in 2019; national house price growth likely to come to a standstill but supply shortage should negate outright falls; and rental growth to accelerate slightly due to declining availability of homes to let.

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NAO housing reports

The NAO review of the housing market says housing demand is still outstripping supply and that meeting the government’s targets (increasing homeownership and delivering a million new homes in England by 2020) will be difficult as household formation is increasing and there may be a market slow down after Brexit. The NAO claim housing has become more affordable for existing homeowners, with the proportion of owner-occupiers who spend at least a quarter of their disposable income on housing falling from 40% to 19% of people with a mortgage. By contrast, housing has become less affordable for first-time buyers, and social housing rents have been increasing faster than earnings since 2001-2.

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 The NAO’s ‘Planning for new homes report’ states that the government will need to oversee a 69% rise in supply to meet its house building targets. This will be challenging as councils are failing to meet their housebuilding targets.

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Shelter’s housing commission

The Shelter report ‘Building for our future: a vision for social housing’ recommends the government invests in a major 20-year housebuilding programme, which would offer a social home to millions who fail to qualify under the current system. It includes: 1.27m homes for those in greatest housing need; 1.17m homes for ‘trapped renters’; and 690,000 homes for older private renters. The report claims private renters on lower incomes spend an average of 67% of their earnings on rent.

Analysis carried out for the commission by Capital Economics suggests the economic benefits of social housebuilding would ultimately outweigh the initial costs. The programme would require an average yearly investment of £10.7bn, but up to two-thirds of this could be recouped through housing benefit savings and increased tax revenue each year. The commission concludes that building a lot more social homes is the only way for the government to reach its 300,000 homes a year target.

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Living at home

Civitas research suggests that a million more young people are living at home with their parents than 20 years ago, especially in London. For 23-year-olds the proportion living with parents has risen from 37% in 1998 to 49% in 2017.

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Mortgages into retirement

The FCA research showed 40% of borrowers who took out a mortgage in 2017 will be aged over 65 when their mortgage matures – leaving them unable to save for a pension, and vulnerable to any financial shocks. In 2012 it was 22%.

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Help to own

The Centre for Policy studies relaunched their affordable housing plan to incentive landlords to sell to their tenants. Under the proposed ‘Help to Own’ scheme, landlords who sell would get a capital gains tax rebate worth a third of their tax bill, with the other two thirds going to the tenant as a contribution towards the deposit. The scheme would be revenue neutral and favour higher value properties.

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