Think-Tank Urges Government to Build More Homes

Tuesday, 26 November 2013

Experts in the housing industry have warned that a lack of supply is to blame for the current house price boom; cautioning that the government urgently needs to build more homes.

According to the Department for Communities and Local Government, the number of homes being built in England has fallen for the fifth consecutive year. 2013 marks the lowest level of new housing stock since the start of the century. Government think-tank Policy Exchange warns that the next government must commit to building a whopping 300,000 homes a year to bring down house prices.

While the housing boom is good news for current homeowners, it isn’t great for tenants or people taking their first steps onto the property ladder. The ONS recently revealed that house prices have reached their highest level since records began, with the average home in London's Kensington costing up to 30 times the average salary, before factoring in home insurance cover or utilities.

The white paper proposes that the government should build new ‘garden cities’ (an idea supported by deputy prime minister Nick Clegg) and argues that the new cities would be “beacons for development”, helping to reach the proposed target of 1.5 million new homes by 2020.

Garden cities are different from post-war new towns. Instead of resembling ‘concrete jungles’, garden cities are planned, self-sufficient communities, surrounded by idyllic green belts. The idea took off at the start of the 20th century, with the building of Letchworth and Welwyn, but fell out of favour during the frenzy of building that followed the Second World War.

While ministers have suggested increasing property taxes (extending capital gains tax to foreign investors and imposing a mansion tax on homes worth £2 million or more), the white paper argues that the government should take a different approach.

Alex Morton, spokesperson for Policy Exchange, explains that “policymakers should ignore calls for a new round of property taxes, and instead commit to spreading the benefits of homeownership and stabilising the UK economy by building at least 1.5 million new homes over the course of the next Parliament”.

Sources:
1. http://www.theguardian.com/money/2013/nov/07/new-homes-england-lowest-level-turn-century
2. http://www.bbc.co.uk/news/business-24533059
3. http://www.independent.co.uk/news/uk/politics/new-garden-city-needed-in-drive-to-build-15m-new-homes-by-2020-8925076.html
4.
http://www.localgov.co.uk/index.cfm?method=news.detail&id=111601

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