By Andy Golding
The UK government has a very clear desire to increase levels of home ownership. For that reason, they have taken many steps to help people onto the housing ladder, most notably the Help to Buy schemes. They’ve also decided that people who own more than one property, landlords in particular, are inhibiting first time buyers, and to back that up, we have seen changes to personal taxation and stamp duty for landlords. It is a good feeling to own the home you live in (albeit probably with a mortgage) but it is wrong to see the first time buyer and landlord markets as the opposites of each other. In that respect, the government’s moves are more than a little misguided.
Housing issues are a function of demand and supply. Demand is too high, supply is too low. That keeps prices high, just like it would with any commodity. Demand is driven by nothing more complex than our growing population. In areas where population growth is highest, demand is high too, making these areas particularly expensive – London and the South East, for example.
Supply is an altogether more complex issue. A figure of 250,000 new homes a year is often put forward as the desired level of new house builds, yet we typically manage something approximating to only half of that figure. Design and consultancy firm Arcadis estimated that to build 250,000 new homes a year would require every bricklayer in the country, plus a few more (6% to be exact) to be employed in housebuilding. Nothing else – just housebuilding. Other trades would be similarly stretched.
That’s not all. We would need fewer planning restrictions and greater co-ordination among all the groups involved in house building – materials suppliers, local authorities, utility companies, the Highways Agency, to name but a few.
However you look at it, fixing the issue of housing supply seems to be an extremely complex task and I am certainly not suggesting that it is an easy task, or that I have the answers. I am, however, saying that to focus on policies that only tackle one side of the equation, in this case demand, won’t succeed in achieving the desired outcome.
In the meantime, the private rented sector ie landlords, will continue to provide much needed housing for people who either choose to, or cannot afford to, buy. With recent survey data from BDRC suggesting that 69% of tenants thought their rent was Good or Very Good value for money, and 79% of tenants satisfied with their current landlord, we should dismiss the suggestion that being a landlord is to be frowned upon. Landlords are an essential and growing component of the UK housing market.
In the absence of a more balanced approach to housing strategy, we will continue to see a reliance on the private rented sector as a source of housing but we should not stigmatise landlords as the main culprit for the nation’s housing woes.