Posts with tag: shortage of housing supply

Current Stock will Solve the Housing Crisis, Says CML

Published On: September 4, 2015 at 10:40 am


Categories: Landlord News

Tags: ,,,

The Chief Economist at the Council of Mortgage Lenders (CML) says that better use of current housing stock is the key to solving the country’s supply crisis.

Bob Pannell states that it is clear that the country needs more new homes.

However, he also believes that for the crisis to come to an end, several issues affecting the use of existing stock must be addressed.

Current Stock will Solve the Housing Crisis, Says CML

Current Stock will Solve the Housing Crisis, Says CML

Pannell argues that even if Government policy helps to create 300,000 new homes in the UK over the next ten years, 90% or more of the housing stock that will exist in 2025 will already be built today and will be lived in.

He insists that it is obvious that demand is being boosted by migration, increasing life expectancy and the rise in the number of single-person households. But he also lists a number of factors that he thinks the Government should address to help solve the crisis:

  • An ageing population that owns a disproportionate amount of housing – which is under-occupied – and is reluctant or unable to move.
  • Rising demand for rental property, as house price growth continues to exceed earnings and first time buyers have no housing equity, unless it is from their parents.
  • Although landlords help to improve the level of rental homes, they often wish to expand their portfolios and thus do not release much property back onto the market.

Pannell says that promoting more activity within the current stock will help: “Helpfully, Government policy often focuses on encouraging new housing construction, and this is essential – although not sufficient – in helping deliver a long-term solution.

“But we should not forget that the vast majority of housing supply in any period comes from those selling existing stock. Promoting more activity across the market as a whole may help to encourage both more efficient use of existing housing and the marketability of new homes.”

He continues: “In particular, the Government should not forget that taxation plays an important role in influencing liquidity in the property market and the efficient use of housing.

“Recent reforms may have improved the structure of Stamp Duty by removing some of its price distorting effects, but it is difficult to disagree with the Institute for Fiscal Studies, that these reforms have transformed Stamp Duty from a very bad tax into merely a bad one.

“It’s tempting to say that we are still recovering from the effects of the credit crunch. And while that’s true, a range of deep-seated and inter-related problems in the housing market is holding back a recovery in transactions.

“They present fundamental and long-term challenges, and will not easily be solved.”

He concludes: “As a result of these factors, we now have a dysfunctional housing market, beset by long-term structural problems that are difficult to address.”1


Will These Prefab Homes Solve the Housing Crisis?

Britain must build around 250,000 new homes per year to ease the severe housing shortage. However, just half of that are currently being built. One company thinks it has the answer to the housing crisis.

Bert & May, an interior design firm specialising in tiles and flooring, plans to sell portable outside boxes that can be big enough for two bedrooms, a bathroom and a kitchen.

Bert & May Spaces, which will launch its units next month at design show Decorex, will sell three types of prefabricated boxes. The smallest is a one-room box costing £25,000, another is a one-bedroom unit retailing from £75,000 and the most expensive is the two-bed option, at £150,000.

The boxes are made from timber, have double glazed windows and an eco-friendly green roof to cut energy costs.

Bert & May states that it has already had some pre-orders, including one from a family in Yorkshire looking for a granny annex.

Co-founder of the firm, Lee Thornley, explains the idea: “The nature of London property prices in particular makes moving house impossible. We want to prove prefabs can be cool – if you have spare land, why not have an extra bedroom? And you can take it with you if you do move.”1

He adds that prefabs are a cheaper alternative to extensions, as planning permission is not required for structures classed as mobile homes.

Thornley says he is already in talks with some local authorities about using the units to increase affordable housing, especially in parts of East London, where house prices have soared in the last few years.

Ealing Council is currently working with Mears and Snoozebox to set up temporary housing made from prefab units to minimise the use of bed and breakfasts for families needing emergency homes.

Although housing transactions are starting to slow, prices in some hotspots are still rising by up to 13% a year, due to a lack of supply. The Land Registry revealed that house prices in England and Wales increased by 4.6% in the year to July.