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Stimulating housing supply - Government initiatives (England)

Published Wednesday, August 15, 2018

This briefing paper summarises key Government initiatives aimed at increasing housing supply in England since 2015. The paper makes reference to planning measures but does not cover them in any detail.

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1 million net additions by 2020 and half a million more by 2022

The 2015 Government’s ambition was to secure 1 million net additions to the housing stock by the end of the Parliament which was expected to be in 2020. The Housing White Paper, Fixing our broken housing market (February 2017) described a number of initiatives which, taken together, are aimed at securing a step-change in housing supply.

The current Conservative Government was elected in 2017 with a manifesto pledge to meet the 2015 commitment to deliver 1 million homes by the end of 2020 and to “deliver half a million more by the end of 2022.” The manifesto said that, if elected, the Government would deliver on the reforms proposed in the Housing White Paper.

The Department for Communities and Local Government (DCLG) was renamed the Ministry for Housing, Communities and Local Government (MHCLG) in January 2018. The Single Departmental PlanThe 2015 Government’s ambition was to secure 1 million net additions to the housing stock by the end of the Parliament which was expected to be in 2020.

The Department for Communities and Local Government’s (DCLG) was renamed the Ministry for Housing, Communities and Local Government (MHCLG) in January 2018. The Homes and Communities Agency was relaunched as Homes England at the same time. The Single Departmental Plan was updated in December 2017 – the plan sets out how the Government intends to achieve an increase in housing supply:

  • Make available £15.3 billion of new financial support for housing over the next five years, bringing total support to at least £44 billion over this period.
  • Reform planning to ensure that the right homes are built in the right places, supported by reforms to the system of developer contributions to ensure new house building includes the needed affordable housing and infrastructure.
  • Encourage the best practice in delivering high quality design to underpin the creation of great places to live.
  • Make sure sites are built out faster through stronger intervention by local authorities, Homes England and acting on the conclusions of the independent review chaired by the Rt Hon Sir Oliver Letwin.
  • Open up the market, getting SMEs, housing associations and local authorities to build more homes.
  • Support development, including the delivery of five new garden towns which provide the opportunity for transformational long-term housing growth.
  • Make housing and planning data openly available so new digital tools can be developed to improve housing supply and the planning process.

Supply and demand side measures

The 2015 Government pursued both supply-side and demand-side measures. There was a desire to increase home ownership, particularly amongst first-time buyers, which was supported through savings products such as the Help to Buy ISA and Lifetime ISA, and also through equity loan schemes. A key commitment was to secure 10% of affordable home ownership of different kinds on housing sites of 10 units or more.  

Home ownership

A number of initiatives are focused on facilitating the purchase of housing, particularly by first-time buyers, through the introduction of savings products such as the Help to Buy and Lifetime ISAs, and also through equity loans and the development of Starter Homes. These homes will be available at a 20% discount off the market price to first-time buyers between the ages of 23 and 40.

The Autumn Budget 2017 announced an increase in the price at which Stamp Duty Land Tax becomes payable for first-time buyers to £300,000. This relief will not apply to properties worth over £500,000.

Affordable housing

The initial aim was to provide 225,000 units through the Affordable Homes Programme up to 2021. This provision would be a mixture of affordable rent (rents set at up to 80% of market rents), shared ownership and rent-to-buy products.  Funding for this programme has been increased to £9.1 billion following the Autumn Budget 2017. There are concerns about the scope for developing social rented housing as part of this programme.

Private development

There was, and is, an expectation that the majority of new building will be carried out by the private sector. To this end, much Government effort to stimulate house-building is focused on planning measures to “make the system more open and accessible and tackle unnecessary delays.” Developers with planning permission are expected to use it and local authorities are expected to have an up-to-date plan in place based on an objective assessment of housing need within the area. The Government is also seeking to diversify the housing market by encouraging development by smaller builders and those interested in embracing innovative and efficient methods of construction.

Autumn Budget 2017

The Autumn Budget 2017, which was trailed as a ‘housing budget,’ set out the Government’s determination to “fix the dysfunctional housing market, and restore the dream of home ownership for a new generation:”

The only sustainable way to make housing more affordable over the long term is to build more homes in the right places. Government action has already increased housing supply to 217,000 in 2016-17. The Budget goes further and announces a comprehensive package which will raise housing supply by the end of this Parliament to its highest level since 1970s, on track to reach 300,000 per year, through:

    • making available £15.3 billion of new financial support for housing over the next five years, bringing total support for housing to at least £44 billion over this period
    • introducing planning reforms that will ensure more land is available for housing, and that maximises the potential in cities and towns for new homes while protecting the Green Belt.

Measures announced in the Autumn Budget 2017 were generally welcomed by the sector, particularly those aimed at supporting small builders, infrastructure and land assembly. There are concerns that there is still not enough support for affordable rented housing, particularly at social rents. There is doubt that the target of building 300,000 homes a year will be achieved without further ‘muscular’ action.

The Spring Statement 2018 provided an update on progress since the Autumn Budget 2017.

The housing Green Paper, A new deal for social housing, was published on 14 August 2018 and contains further proposals aimed at stimulating housing supply. Submissions are invited up to 6 November 2018.

Other relevant Library briefing papers

Detailed information on Government action to improve the planning system can be found in these Library briefing papers Planning for Housing (03741); Planning Reform Proposals (6418); and Planning reform in the housing white paper (7896).

Library briefing paper Tackling the under-supply of housing in England (7671), considers key trends in housing supply in the UK and goes on to focus on some of the of the key barriers and potential solutions to increasing supply in England.

 

 

Commons Briefing papers SN06416

Author: Wendy Wilson

Topics: Housing, Housing supply, Owner occupation, Private rented housing, Social rented housing

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