Housing is a fundamental right. A safe, secure, and affordable home (rented or owned) is essential for people to build stable lives, yet for too many in the UK, this is out of reach.
With an estimated shortfall of 4.3 million homes, many are being squeezed out of the property market, while renters face rising costs and a lack of security. The new government has rightly prioritised housing reform by reintroducing housebuilding targets and reviewing renters’ rights, but there are further pieces to this jigsaw.
We need to look at the underlying causes of the current crisis: insufficient housebuilding, an inefficient use of existing housing stock, unaffordable rental markets, and the impact of policies like Right to Buy, which has reduced the UK’s stock of much-needed social housing.
A proper plan for housing
In UK Finance’s new Homes We Need report, we set out a blueprint for tackling these issues. Mortgage lenders will continue their role in supporting homeownership, but this needs to be accompanied by a comprehensive approach to housing policy.
For decades, the UK’s housing sector has been unable to meet the demand for new homes. Our overly complex planning system, coupled with inconsistent housing policies, has stymied development. We need a simpler, rules-based planning system that provides shorter development timescales and consistency in planning decisions – and it is encouraging that the government has prioritised this.
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Without this, the homes we so desperately need will remain on the drawing board.
Our own data shows the increasing challenge for those wanting to get onto the housing ladder. The average household income for first-time buyers is over £63,000, and over half of them are taking out longer-term mortgages – over 30 years – to improve affordability. Stamp duty exemptions, while helpful to reduce upfront costs for buyers, don’t address wider issues or affordability when house prices remain so high.
Shared ownership schemes could offer a lifeline, but in order for the tenure to reach its full potential, access to the scheme, transparency, and customer outcomes will need to improve.
Challenges across the buyer spectrum
At the other end of the spectrum are ‘last-time’ buyers – older homeowners wishing to downsize but facing considerable barriers. Policymakers often overlook this group, but help for older homeowners could ease supply burdens across the board. We suggest the creation of an independent advice service to help older homeowners navigate the daunting prospect of downsizing.
A stamp duty exemption for downsizers could also make a significant difference. Furthermore, any new housing targets should include an adequate supply of accessible, age-appropriate homes, in areas in which older people want to live.
Then there’s the rental market. High property prices, regulatory changes and increases in interest rates have driven many private landlords out of the sector, reducing the already limited supply of rental homes. It is essential that we rethink how we support private renters, social renters and landlords.
Reviewing the Local Housing Allowance to ensure it keeps pace with rent increases is crucial, as is incentivising landlords to make green investments through tax relief. A national register of private rental properties that mortgage lenders can access would also help raise standards and ensure accountability for rogue landlords.
It’s clear that piecemeal reforms won’t suffice. The lack of affordable housing, the inefficiencies in the private rental market, and the challenges faced by both first-time buyers and homemovers all require coordinated action.
The government must support housing construction, reform mortgage rules, incentivise landlords and, most importantly, ensure that housing policy is properly long term in nature.
Only by taking bold, decisive action to reform the entire housing system can we secure a future where everyone in the UK has access to a safe, affordable place to call home.
