The government is finally turning its attention to the housing crisis, but what’s missing?
There's no question that the housing market is in need of drastic reform.
So it was welcome news last week when the chancellor announced that the government was turning its attention to reforming the supply side of the market through a £500m Housing Infrastructure Fund and British Business Bank guarantees for SME house builders.
In broader terms, there seems to be an increased focus on making it easier for diverse groups to gain approval for finance, as well as building new housing. But these were far from root and branch reforms and, as is always the case with supply-side measures, we will have to wait longer than desirable to assess their impact.
We were surprised that the government didn’t move on guaranteeing three-year tenancies, not just because of the growing number of renters, but because of the housing minister’s announcement in July of plans along these lines.
The idea that the government should intervene in the private rental market is controversial, but there's no doubt that lease reform could provide tenants with increased security of tenure and protection from arbitrary midterm rent increases.
We continue to see evidence ourselves that more stable tenancies are actually better for landlords – reducing voids, and wear and tear.
The trajectory towards greater security for tenants and more overheads for landlords is clear, and this certainly looks like a strong Conservative policy candidate, should they have the political will to proceed.
However, there was some good news for tenants that was not mentioned in the Budget. The government has since announced that private landlords will not be able to put properties onto the market with the two lowest Energy Performance Certificate (EPC) ratings.
The changes are expected to save renters living in 290,000 properties (around six per cent of the market) an average of £180 a year. This is very big news for tenants living in cold, damp, expensive to heat homes.
On the fiscal side it’s a shame that stamp duty remains largely unreformed, despite the announcement of its abolition for first-time buyers of shared ownership homes.
Regardless of your age, stamp duty is a tax that prevents housing mobility, and is particularly penalising towards growing families and those wanting to downsize. It's also a tax on social mobility, discouraging relocation in pursuit of better paid jobs.
Political posturing on foreign property owners is not a substitute for action here, particularly in the South East and London where even small properties attract large tax bills.
Financial services is also in need of reform if we are to encourage more young people to save to buy their own homes, and the government should start by simplifying Isa rules.
Under the current system, individuals have to choose one provider for their annual stocks and shares Isa, which hugely favours incumbent players and puts little downward competitive pressure on their fees, which remain too high.
Given the proliferation of new platforms looking to bring new options for investment to the masses, it’s now time to make it easier for normal people to spread their Isa investments across platforms.
It's simply a question of HMRC's reporting systems: self-invested personal pension investors have long been able to have multiple, concurrent wrappers in their names.
Rather than introducing new, increasingly complex types of Isa, it’s time for the government to improve what they already have.