Fixing our broken housing market?

Government unveils its plans fix the ‘broken housing market’

In February of this year the Government published a paper called ‘Fixing our broken housing market’ which sets out their plans to make significant changes to the housing market.

The report is split into four areas:

1. Local Planning Authorities planning for the right homes in the right places
2. Building homes faster
3. Diversifying the housing market
4. Helping people right now to invest in affordable homes

The overall thrust of the proposals is to increase the supply of housing to reduce the upward pressure on rents and house prices, making it easier for first time buyers to get onto the housing ladder and to reduce homelessness.

Most of the proposed policies will take some time to implement and take effect so they are supplemented by some shorter-term actions designed to make life easier for renters and people trying to get onto the housing ladder.

Will the policies impact rents and house prices?

Recent governments have tried to increase housing stock but none have had a significant impact on house prices or rents. Whilst this white paper acknowledges that drastic action is required, there are very few new or significant changes proposed but a lot of ‘tinkering around the edges’ of existing or already announced plans.

It’s doubtful that any increases in housing stock will be significant enough to have a substantial influence on rents or house prices on a national scale; there may well be market variations in local areas where significant house building occurs, however.

These are some highlights from the proposals:

Banning orders for letting agents and landlords

It is proposed that Local Authorities (LAs) will be given powers to issue banning orders ‘to remove the worst landlords or agents from operating’.

Councils can already stop individuals or companies from managing licensable HMOs if they don’t believe them to be fit and proper persons, so I can’t see how this will have a significant impact.

Anything which removes bad agents or landlords from the market is always good for those who do things properly, though.

Letting agent fees to tenants

The report confirms that the government will ‘consult early this year, ahead of bringing forward legislation as soon as Parliamentary time allows to ban letting agent fees to tenants.’

It is expected that most letting agents will need to increase their fees to landlords, which will then be passed on to tenants in the form of higher rents.

Planning Fees

It is proposed that those LAs that meet their targets for delivering new homes will be allowed to increase their planning application fees by 20% from July 2017.

A consultation will also be launched regarding the introduction for charging fees for planning appeals to deter unnecessary appeals, with the potential for fees to be refunded if the appeal is successful.

Maximum Use of Land

Maintaining Green Belts is still set to be a priority for LAs who will only be allowed to use the land in ‘exceptional circumstances’. In the first instance, they will in the first instance be encouraged to make better use of existing land, using the following strategies:

• Promotion of higher-density housing in urban areas
• The requirement of plans to make efficient use of land
• To avoid low-density housing where there is a shortage of sites
• Encouragement of the building over or replacement of low density uses including car parks
• Promotion of upward extension

Housing Delivery Test

The government is proposing a rolling three-year housing delivery test which will be used to monitor the performance of LAs against their housing plans. In the event of authorities failing to deliver, there will potentially be requirements for them to produce action plans, provide a 20% buffer on the housing land supply or if they are really struggling, a presumption for sustainable development would automatically apply.

Pressure to Build

In order to pressure builders to start building on land they own quicker, it is proposed that the time allowed between planning permission being granted and the start of building will reduce from three to two years.

Other proposals include:

• Using a £3bn Home Building Fund to help smaller building firms challenge major developers, including support for off-site construction, where parts of buildings are assembled in a factory
• Opening up the 2016-21 Shared Ownership and Affordable Homes Programme to delivery of homes with tenures wider than just shared ownership
• Extending the Right to Buy Discounts to housing association tenants
• A “lifetime ISA” to help first-time buyers save for a deposit
• Continuing to encourage local authorities to bring long term empty homes back into use