The UK’s housing sector needs to be reformed because young people today cannot afford to buy a home and choice in the lettings market does not meet demand, a new report suggests.
It calls for the introduction of indeterminate tenancies as the sole form of private rental contract available in England and Wales, following Scotland’s lead, and compulsory local authority registrations for English landlords in line with the rest of the country.
The report from think tank the Resolution Foundation, also calls for some form of ‘light’ rent control that would stabilise private sector rents and limit rise to inflation for set three year periods.
But perhaps the most radical suggestion is for a one off ‘Citizen’s Inheritance’ payment of £10,000 for all 25 year olds which the report says could help them towards buying a home. It would provide up to half of a deposit for a typical property outside of London.
It suggests it could be funded by replacing inheritance tax with a new lifetime receipts tax that tackles widespread avoidance, levies the tax on recipients not estates and entails lower tax rates for all.
It address all areas of the housing market, also calling for the establishment of a housing tribunal system which would have powers to adjudicate on possession applications and challenges to rent rises.
When it comes to buying, the foundations says there should be a limit to future Help to Buy equity loans to those with an annual household income of less than £60,000 a year and stamp duty should be halved so that it supports property purchases by first time buyers and movers.
It backs the higher rate of stamp duty for additional homes and suggests that the owners of additional homes selling to a first time buyer should be given a time limited cut to capital gains tax to encourage them to do so.
In big cities, the report says that mayors should be given the power to limit the sale of homes in housing hotspots to British residents.
The foundation recommends the creation of a unit of highly skilled planners in central Government to support local authorities in areas of high housing need, and with a full five year land supply, to deliver high quality developments.
It backs the growing Build to Rent sector, saying that the stamp duty surcharge on additional properties should be waived for institutional investors that either construct Build to Rent properties or buy them within five years of construction.
Reform of the viability process is suggested to ensure that builders deliver on their up-front affordable homes commitments except in exceptional circumstances and adds that allowing local authorities to raise additional money to build new homes via a property tax building precept and new borrowing flexibilities would boost the number of houses.
