Mortgages  

Brokers warn govt housing targets are 'unattainable'

Brokers warn govt housing targets are 'unattainable'
Photo by Hasan Albari via Pexels

Government ministers need to do more to support Britain's housing market to help would-be homeowners, lenders and brokers alike have claimed.

Tomer Aboody, director of property lender MT Finance, said the government needed to do more to tackle the alarming lack of supply in the housing market.

He said: "With such a lack of supply in both the sales and rental markets, purchase prices and rents are running away with themselves."

Although rising interest rates could "help curb the uptick in property prices", this would be at the expense of the consumer, who would end up no longer being able to afford the mortgages they need to purchase these homes.

But while this would reduce demand, and in turn, slow down the pace of price growth, it is not enough. 

Aboody called on the government to help increase the supply of stock coming to market by "revamping the stamp duty system.

"Something targeting downsizers in particular, encouraging them to sell, would help increase sales volumes and keep a lid on prices as there would be more balance between supply and demand. 

"We also need to look at ways to increase house building, providing the family homes which are so desperately needed."

According to Aboody, there is an excess volume of flats built recently, but "they're either unaffordable to the majority of the market or do not provide the required space for a family.

"A need for outside space, with balconies, but more importantly communal gardens within these new developments, will encourage more family flat living, reducing the demand on houses."

Similarly, Richard Adamson, partner at Allsop, said the government simply was not enabling enough supply. 

Adamson commented: “The shortage of quality housing at attainable prices has been a concern for the past decade, and the lack of supply is the root cause of this problem.

"With planning departments understaffed and chronically underfunded, it is hardly surprising that developers are struggling to build new homes at a pace that would allow to correct this market imbalance.

"There is clearly the political will to fix the housing crisis, but the government’s ambitious targets are simply unattainable if planning applications can’t be reviewed and approved sufficiently quickly."

He said the faster the new schemes get approval, the more homes will become available, and the more likely brokers and advisers are to witness a readjustment in pricing.

Lost local authority builds

According to latest construction data from Statista, before the 1990s, local authorities were a significant source of new housebuilding in the UK. 

For example, in 1970, local authorities build 179,280 homes, compared with 174,350 by private enterprises and 8,590 by the housing association.

But former prime minister Margaret Thatcher's right to buy policy in 1980 - which got a new lease of life in 2012 under David Cameron's coalition government - created a significant drop in local authority constructions.