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How to Solve a Housing Crisis

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Although house prices remain buoyant and interest rates are at an all-time low, the economy is in dire straits and only a fifth of 18-34 year-olds are able to get on the housing market.  Many commentators believe that the housing market faces a growing crisis and some have come up with some radical suggestions to reverse this.

Encourage the Elderly out of Big Houses

The Intergenerational Foundation says that more than a third of housing stock is under-occupied with more than half of the over 65s “hoarding housing.”  It says that the older generation should be encouraged to move into smaller homes by being given tax breaks to do so.

Reform Planning Laws

The Government’s indication that it will reform the planning laws has attracted commendation and condemnation in equal measures.  Some, such as the Home Builders Federation, believe our planning system to be antiquated and need of a radical shake up.  Others, such as the National Trust and the Campaign to Protect Rural England, believe that reforming the planning laws will be a disaster.  Either way, the Government have indicated that local councils should adopt a “presumption in favour of sustainable development”, making it harder for officials to reject planning proposals.

Control the Population

The population of England is predicted to grow from 21.7m in 2008 to 27.5m by 2033 – an increase of 27%.  Scotland, Wales and Northern Ireland are also forecasted to fare little better.  It is argued that more than a third of this increase is down to immigration and it is a controversial subject that Government Ministers normally chose to stay quiet on, although David Cameron has pledged to get annual immigration levels down to “tens of thousands.”  Using the predicted figures, even if house building were to increase by 25%, there would be a shortage of 800,000 homes in England by 2033.

Force Dormant Landlords into Action

There are reportedly nearly 1 million empty homes in the UK – and 350,000 of these have been empty for more than 6 months.  The last Government gave councils the power to force landlords to bring empty dwellings back into use, but so far, this has only been applied in about 60 cases.  There are a number of reasons why these properties remain empty, such as speculation and tax saving, but the main reason is that landlords simply can’t afford to refurbish them.

A Ban on Second Homes

Second home owners currently receive a council tax discount, but the Government is under pressure to scrap this policy.  Would this be enough in itself to discourage people from owning a second home?  It would seem unlikely.  The problem is greater in some areas than others; in Cornwall, for example, it is estimated that around 1 in 20 houses is a holiday home. 

Mortgage Payments Guaranteed

Lack of mortgage availability remains a key factor in the current dormant housing market in this country.  If people can’t buy, then builders won’t build.  Some commentators believe that the Government should get together with developers and lenders alike to fund an insurance scheme to underwrite mortgages, when a lender defaults.

Although there are already schemes in place that give Government or Local Government help to first-time buyers, such as HomeBuy, lenders are unable to offer many mortgage products for good reason.  In a depressed European economy, most are struggling to obtain the funds themselves and let us not forget that the global financial crisis was originally caused by sub-prime lending in the US.

Live Together

Although to most Britains, this would seem distinctly unattractive, but by following the southern European model of parents, children and grandchildren all living under the same roof, the housing stock would be more efficiently distributed.  In 2008 the Skipton Building Society predicted that this type of living would escalate from 75,000 to 200,000 over the following 20 years.

The so-called UK ‘boomerang’ generation – young adults moving back in with their parents for financial reasons – will have undoubtedly swelled the numbers living under the same roof and have given the Skipton’s figure a distinct chance of coming to fruition.

More Council Houses

The number of council houses being built has been on the wane since the 1950s, and has now practically dried up.  In 1950, 168,000 were built; by 2010, that figure was just 1,320.  The ‘right to buy’ phenomenon started by Margaret Thatcher’s Conservative Government in 1979 led to a massive depletion in stock, with more than two million tenants taking advantage of the scheme.  This has led to massive waiting lists, as council houses are needed now, more than ever.

Since 1990, social housing has mainly been the preserve of housing associations and since that year they have built around 27,000 homes.  Although building more social housing would be desirable, it is clearly not the answer to the country’s housing crisis.  More affordable housing would make more sense.  With an economy in the doldrums the Government would clearly not have the funds to return to the mass social builds of previous generations – even if it wanted to.