Brokers warn govt housing targets are 'unattainable'

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.

The government needs to invest money into local authorities.Adamson

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. 

According to an economic analysis in 2015 by the Institute of Fiscal Studies into the original right-to-buy scheme, by the mid-2000s, around 2.8mn council houses had been sold in the UK.

That same 33-page document - The right to buy public housing in Britain: a welfare analysis - stated: "The private housing market is competitive. The profit of constructing a property and selling it is zero."

Little wonder the local authority coffers did not stretch to swathes of new builds; the Statista analysis revealed that, by the end of 2019, local authorities had built just 3,800 homes, compared with 172,010 from private enterprises (see graph, below).

However, these builds are still below the "at least 200,000 per year" that the 2004 Barker Review stated were needed in the UK.

Adamson called on the housing minister, whose responsibility it is to ensure planning policy and casework oversight, to do more. 

He said: "If the government really wants to turn its words into actions and help tackle the housing crisis, it needs to invest money into local authorities so that they can open up land for their communities on which private investors are ready and willing to build much-needed new homes – that’s the only sustainable way to bring down the cost of housing.”

The latest minister, Stuart Andrew, MP for Pudsey, joined the Department for Levelling Up, Housing and Communities from the role of deputy chief whip after Prime Minister Boris Johnson's latest reshuffle.

The government needs to do more for the landlords who no longer wish to invest in this sector.Hassell

But this this is the 20th housing minister since 1997 - raising questions of stability of leadership from the top down when it comes to setting, establishing and seeing government policies through.

Stuart Collar-Brown, director and co-founder of My Auction, said while the recent interest rate rise could "put the brakes" on the property market, the real issue, again, is the lack of supply.

"It’s these shortages that normally push prices up with more competition in the market, and a trend that we expect to see continue over the coming months.”

No better for renters

Their comments were echoed by those of lettings specialist, Tim Hassell, managing director of Draker Lettings, who said there had been a "consistent decline" in available properties in and around London, with little support available for buy-to-let investors.

He also brought the problem to Whitehall's door, claiming: "With available property levels in consistent decline, the government needs to do more, not for tenants, but for the landlords who no longer wish to invest in this sector."

He said prices have increased by 17 per cent in central London in the first quarter of 2022 so far. "Choices down equates to prices up, which in turn puts huge pressure on people coming to London to relocate, especially the young and more vulnerable."

And then there are other procedural changes which need to be put in place. 

Lisa Simon, head of residential at Carter Jonas, said she would like to see changes to improve the conveyancing process.

Simon said: "It is far too slow. Local searches, carrying out surveys and so on: this is all taking too long. Solicitors have also struggled to keep up with the volume and this is the area where ensuring information is available to all parties can only be a good thing.”

simoney.kyriakou@ft.com