Property investor relief as government admits broken housing market

The UK government has finally admitted we have a “broken” housing market in the UK in light of its recent White Paper. Even though we have been here before, with various governments in the past “recognising” the problem, very little progress has been made. However, there are hopes that changes in the pipeline could prompt a significant increase in new housing developments across the UK.

Reducing red tape

Anyone who has applied for planning permission will be well aware of the difficulties in finding the right people and getting the right answers. Sajid Javid, the community secretary, has confirmed that new legislation will place pressure on local authorities and housebuilders to increase the pace of development. The idea is that compulsory purchase orders will be made more widely available, thereby reducing the amount of red tape, and planning permission will only last two years as opposed to 3 years – thereby speeding up development.

The government has also announced a £3 billion fund to increase competition in the UK housebuilding sector which should allow smaller developers greater access. These plans seem very interesting on paper but we need to see them in practice on a long-term basis.

Council housing plans

No two councils across the UK have the same housing development plans and many of these are not even in the public domain. However, in a move which was flagged some time ago, councils up and down the UK will now be forced to produce up to date plans for housing demand. This will put more focus upon council backed property development and also the speed at which planning applications are processed.

Many people will look back to the 1980s when councils up and down the UK introduced the “right to buy” scheme under the then Conservative leader Margaret Thatcher. While this move certainly encouraged people to own their own property it has subsequently left councils dangerously short of social housing. However, it has to be said that the councils were not complaining of the additional income at the time!

Tories move away from home ownership

In the last Tory manifesto there was specific mention of encouraging homeownership across the UK. Even though the government will still encourage people to acquire their own properties, this has been diluted slightly as the recent White Paper gives local councils the green light to focus on rented homes and long-term tenancies. This comes at a time when the government has been introducing tax after tax on property investments with the buy to let market a particular target. So, have we come full circle in just a couple of years? Does the government now need outside investment from private investors?

Too little too late

While many people have been calling for major changes to the UK property market the White Paper, if it ever comes to fruition, has some very interesting suggestions. Any reduction in red tape would be gratefully appreciated, additional funding for smaller developers will go down well but there now seems to be an official move away from home ownership, towards rental (both local authority and private rental). Is this a sign of things to come?

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