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Summary

Housing need

It is widely accepted that the UK is in the midst of a crisis in housing supply. This crisis has not developed suddenly, but has resulted from decades during which successive Governments have failed to ensure that sufficient housing is built to keep pace with household formation.  Numerous research studies estimate a need to develop between 220,000 and 300,000 new homes annually. 

Home ownership

The rate of home ownership grew from around 55% in the early 1980s to peak at over 70% in 2003. Since then it has fallen to 62% in 2013-14, which is around the same level as it had been in the late 1980s. At the same time, within the overall total of owner occupiers the proportion who own outright has been falling and the proportion with an outstanding mortgage has been rising.

Private rented sector

The English Housing Survey for 2012/13 showed that of the estimated 22m households in England, four million (18 per cent) were renting privately, while 3.7m (17 per cent) were in social housing. This marked a significant tenure shift.  The growth in the private rented sector is, in part, attributed to difficulties people are facing in accessing home ownership, particularly younger people, together with restricted access to social housing (local authority and housing association sub-market rented homes). Poor housing conditions in the private rented sector, coupled with its high rent levels, attracts a great deal of adverse media attention.

Government policy

The Spending Review on 25 November 2015 set out plans to double the housing budget from 2018-19 (to around £2 billion) and contains a Five Point Plan to deliver 400,000 affordable housing starts by 2020-21 to include:

  • 200,000 Starter Homes[1] with a £2.3 billion fund to support the delivery of up to 60,000 of these homes; the remaining Starter Homes will be delivered through changes to the planning system.
  • 135,000 Help to Buy: Shared Ownership homes.
  • 10,000 Rent to Buy homes where a tenant can save for a deposit while renting a home.
  • 8,000 or more specialist homes for older people and those with disabilities.
  • 50,000 additional homes “from existing commitments.”[2]As with measures in the Housing and Planning Bill currently before Parliament, the focus of the Spending Review is on increasing opportunities for home ownership.
  • The acceleration in housing supply is to be supported by a range of other measures, including further planning reforms and the release of public sector land with capacity for 160,000 homes.

As with measures in the Housing and Planning Bill currently before Parliament, the focus of the Spending Review is on increasing opportunities for home ownership.

[1]               Homes sold at a 20% discount compared to the market value to first time buyers under 40 years of age.

[2]               Spending Review and Autumn Statement 2015, Cm 9162, November 2015, para 1.146

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