Advisers slate proposal to ditch Green Belt rules

Martin Stewart, founder of London Money, dismissed the suggestion made by the right-wing think-tank that green belt development should be freed up for affordable house builds.

Mr Stewart said: "If I were fortunate enough to be considered a youth, I'd be offended that I was being told that destruction of nature was my only hope of gaining a foot on the housing ladder."

He was responding to comments made by Mark Littlewood, director general of the Institute of Economic Affairs (IEA), who said the only "meaningful" way to resolve the housing crisis and build the required number of new and affordable homes was to sweep away out-dated rules protecting the green belt.

Mr Stewart suggested there were other things the government could do, rather than remove important protections against building on green belt land. He suggested the government could:

• Improve the planning application process.
• Make compulsory the purchase of properties empty for more than five years.
• Put a cap on the number of properties that can be owned.
• Set up a government developer.
• Fund more social housing.
• Put stamp duty land tax on the sale, using the proceeds to build more houses. 

Mr Stewart added: "No one is purporting some Stalinist approach to property ownership but the government should be allowed to use all powers of legislation and taxation in order to make home ownership fairer and help declassify it as an investment.‏"

Tim Morris, IFA with Russell & Co Financial Advisers, agreed there would be fewer objections to building on brown belt, rather than green belt land, although he said he thought green-belt development would "become a necessity".

Just when Baby Boomers pull out the equity to assist their offspring, the option of downsizing would often be better for society as a whole. Sebastian Riemann

He said: "I do not have an issue with building on the brown belt. It can be expensive and drawn out, yet there would be less objections and therefore more likely to actually happen. I get annoyed with how long it takes us to get decisions approved - yet I understand why we have to protect certain interests.

"However, we need a sensible and pragmatic approach to development."

Moreover, Mr Morris said overall, perhaps the narrative should shift away from a focus on homeownership. He explained: "With regards to home ownership for the young, perhaps we need to change our national obsession towards home ownership.

"If it wasn’t drilled into them that owning a home is a vital step to adulthood, perhaps prices would naturally level out over time - making house prices more affordable in the long run.

"Plus, the younger generation will be the wealthiest of any in terms of inheriting property wealth. Arguably, this means they have less need to rush into the property ladder and take on such obscene amounts of debt - which many first-time buyers have to do."

Other advisers suggested alternative ways to improve the housing situation and ease house price growth to make ownership more affordable would be to curtail additional mortgage lending after 60 years old, encourage downsizing with incentives and to apply harder brakes to the buy-to-let market. 

Sebastian Riemann, mortgage and protection consultant for Libra Financial Planning, said: "I don’t begrudge people who have paid off their mortgage and own their property. The issue is that most 60 year olds don’t, and then increase borrowing to fund their kids/grandkids. That’s an issue fuelled by equity release and later life lending.

"We have a combination of too many empty homes, not enough affordable homes, under occupancy, buy-to-let and [a national] infatuation with income from property. Just when Baby Boomers pull out the equity to assist their offspring, the option of downsizing would often be better for society as a whole."

Why should the new generation lose the green belt? There needs to be a proper joined up, long-term housing plan that is outside of party politics. Andrew Montlake

He added the 'bank of mum and dad' maintained an artificial house price bubble. Mr Reimann explained: "The retraction of suitable and affordable family homes by these [people] sitting on appreciating assets and fuelling this by pushing up first-time-buyers' home prices is the root of the problem.

"[If they downsized] the family homes would be freed up and the market would becomes liquid. They could even invest to support the rental market."

Other advisers agreed the issue of high house prices and low ownership among younger people was a demographic one, rather than simply a matter of lack of new builds or restrictive government policy.

Al Rush, principal at Rutland-based Echelon Wealthcare, commented: "We have too many people living too long, more divorcees, etc. In 21st Century Britain, houses can grow in value, or 'earn' more than their residents."

He quoted the 2017 government White Paper, Fixing Our Broken Housing Market, which set out recommendations to:

• plan for the right homes in the right places.
• build homes faster.
• diversify the housing market.
• help people now.

The White Paper also consulted on changes to planning policy and legislation in relation to planning for housing, sustainable development and the environment.

It recognised there was a significant dichotomy between the generations, with young people unable to afford to get onto the housing ladder, and the older generations remaining in their properties for longer, perhaps even inheriting second homes.

However, Mr Rush said addressing this disparity by "punishing people simply because they happened to be born at an earlier moment in history, is facile and short sighted".

As reported earlier today (6 August) by FTAdviser, the IEA's proposal is also short-sighted in terms of the potential, long-term environmental impact. 

At the time, Andrew Montlake, director for Coreco, said: "Why should the new generation lose the green belt? There needs to be a proper joined up, long-term housing plan that is outside of party politics.

"It is never dealt with properly by any government despite being an election priority."

So far, the UK government is on its eighth housing minister in as many years, with the recent appointment of Kit Malthouse just the latest in a string of politicians in charge of housing policy. He succeeded Dominic Raab, who was only in the position since January this year. In turn, Mr Raab succeeded Alok Sharma, who lasted from June 2017 to January 2018. 

Since 2010, the longest-serving housing minister was Grant Shapps, from May 2010 to September 2012.

simoney.kyriakou@ft.com