26-06-2013

New Report Critical Of Government’s 'Short Termism'

The Rics study concluded that the housing market has not delivered enough homes at affordable prices. Rics welcomed the government's Help to Buy scheme which lends people up to 20% of the value of a new-build home, but which has attracted criticism elsewhere.

The report recommended doubling the current target of 100,000 new homes on publicly owned land, and said builders should be made to start work within three years of acquiring planning permission.

"Governments must increase the scale of their ambitions to match the scale of the challenges," it said. There had been a "near disappearance of government-funded research on housing since 2010", the Rics study added.

It called for the creation of an independent committee to advise politicians from all parties on housing supply, and a new body bringing together private-sector and academic research on housing. It also said ministers "must carefully review the introduction of their welfare reform measures and... be vigilant that the unintended consequences do not outweigh any benefits".

In particular, the under-occupancy penalty on housing benefit claimants in social housing deemed to have surplus bedrooms should not apply where the tenants are unlikely to find alternative suitable accommodation in the area, it said.

Rics also criticised the Right to Buy scheme - under which council housing tenants can buy their homes at a discount - which it said "frequently reduces the supply of affordable rented homes in a locality", and called for it to be replaced.

Housing minister Mark Prisk said the government was "fixing all areas of the dysfunctional housing market it inherited".

Prices Still On The Up

England's house prices were driven up last month by a 6pc rise in London and a 3.6pc rise in the East Midlands. In the latest House Price Index from the Office for National Statistics the average cost of a house in the UK rose to £238,000.

The year-on-year increase reflected growth of 2.8% in England and 6.2pc in Wales, which were offset by declines of 1.2% in Scotland and 0.8% in Northern Ireland.

England's house prices were driven by a 6% rise in London to an average of £414,000 and a 3.6% rise in the East Midlands to an average of £171,000. Prices across the UK were up 0.4% month-on-month. Overall, the property market is much healthier than it was this time last year but take out London and the South East, and the average growth figure falls to 1.4%

First time buyers have been hit hardest by increasing costs. The ONS figures showed that first-time buyers paid 4.7% higher on average than a year earlier, compared to those who already owned, who paid just 1.9% more. Higher house prices mean overcoming bigger barriers to access the market, locking out anyone unable to raise a substantial deposit.

The number of mortgages on the market has increased sharply and lenders have slashed their rates since the Government launched the Funding for Lending scheme last August.

In support of Rics view, the government's Help to Buy scheme does appear to be working, with 4,000 extra reservations on news builds in the first two months of the scheme.

However, concerns have already been raised that the scheme could create a bubble by artificially pushing prices too high. Last week the Building Societies Association became the latest critic warning that it could inflate property prices.

The scheme, a key feature in the March Budget, is intended to stimulate activity in the property market. The first element, a shared equity scheme where the Government loans up to 20%of the value of new build homes to borrowers, was launched on April 1 this year.

The warning from the BSA echoes concerns of various influential bodies including the Office of Budget Responsibility, the Bank of England and the International Monetary Fund.

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