Radical ideas to fix the UK property shortage in 2018
Updated: November 27, 2017
In recent years, successive British Governments have attempted to correct for rising house prices, making more property more affordable for lower-income families and first-time buyers. Despite politicians' efforts, a fall in real wages, tightened household budgets and Brexit-induced economic uncertainty, average house prices continue to rise year-on-year.
The main culprit is a lack of stock. Estate agents across England and Wales report that there are fewer properties on their books than any other time in the last 30 years.
A solution abroad?
The UK is not the only country to face a property shortage. From Hong Kong to Denmark, policy makers have wrangled with this problem, leading to a wide range of possible solutions.
In a small country with notoriously rigorous citizenship requirements, it should not be a surprise that property ownership is similarly policed. Non-residents may only buy in certain areas, and not at all in the largest cities; Geneva, Zurich and Basel.
The country has become popular with wealthy Chinese and other Pacific Rim investors, leading to several measures to curb foreign buyers. These include an "empty homes" tax and a stamp duty surcharge as high as 8% in some states.
Taking a simpler approach, the Danes require that any non-EU citizen purchasing property in the country must have been a resident for at least five years, and must then apply for permission to buy.
From HK's infamous coffin homes to the penthouse's of the super-rich, the city is rife with housing inequality. The average citizen would need to save 18 years of pre-tax salary to afford a home. The Government has pledged to build more and more sponsored housing, but despite these and other efforts, like taxes on foreign-owned property, the gulf is getting wider.
Vancouver is introducing an "empty homes" tax equal to 1% of the property's value for any home that remains empty for 6 months of the year. Revenue from the scheme is invested in affordable housing projects. Similar measures have been put in place in Paris, France.Back to top
UK legislation in place
Would such measures have an impact in the UK?
In fact, a "tax" on empty homes already exists in this country, having come into force in 2013. Property owners in England and Wales must pay a 50% premium on Council Tax if the residence remains empty for over two years.
One of the main issues raised against this effectiveness of this premium is the difficulty of enforcement.
Radical solutions needed
Since 2008, the average time lag between planning permission and a new build home coming on to the market has lengthened from 21 to 32 months.
Professor Paul Cheshire of the London School of Economics has argued that "there is no chance" that a Government target of 1 million new homes by 2020, set last year, will be achieved.
UK think tank, the Bow Group, argued two years ago that "investment buying" would simply keep pace with new building, and that radical systemic changes were needed. Similarly, property journalist Henry Pryor has argued that the UK should "provide examples" rather than "ripping off ideas" from other parts of the world.
Facing an acute housing crisis after the end of the Second World War, the problem was overcome by a sense of "emergency", overcoming planning restrictions and vested interests.
Until a similar change of attitude occurs, commentators feel it is unlikely anything meaningful will change.