Housing – the housing market is dysfunctional delivering neither the houses we need nor at prices we can afford. It represents far too great a share of our economy and the drive to create a house ownership democracy has resulted in over inflated prices. The government continues to subsidise the sector through subsidies that are not granted to other investment options, which in turn has further inflated prices. For example if you take a loan to pay for a buy to let property the entire interest of that loan can be written off against your income. A similar tax break does not exist if you took a loan to buy shares in a company.
Government subsidies have turned homes into investments that attracts a disproportionate share of our economic wealth. In our picturesque towns and villages people invest in 2nd homes that are only occupied for 2-4 weeks in the year. The returns that can be made now attract foreign investors into London City Centres where whole areas are becoming devoid of residents.
To bring normality back to the housing market the government needs to stop the tax breaks and subsidies to the property sector and use the money saved to invest in schools, education and in young entrepreneurs.
We need affordable housing but we should recognise that since the 1950s the private house building sector has rarely built more than 150,000 homes in any one year. The following graph illustrates the problem all too evidently, Margaret Thatcher’s right to buy programme has proven to be a catastrophe in ensuring we have sufficient housing. From the mid 80s onward house building stopped by local authorities but the private sector has singularly failed to pick up the slack:
The evidence is incontrovertible if we need more homes we need to return to local authorities being able to build affordable housing for our key workers and those houses should meet the highest energy efficiency ratings as is standard in Germany and Scandanavia. Local authorities could be prioritised to develop brownfield sites that seem an anathema to the private sector, greenfield sites should only be built upon as a last resort.
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