Redesigning Housing Policy

Abstract

Executive SummaryDiscussion of the UK's housing crisis is of long date, and tends to focus on a simple story about a mismatch in housing supply and demand and the consequent need to build more homes. Yet the reality is more complex with multiple sub-plots including social housing, stress in the private rented sector, benefits, subsidies and ultimately taxation of home ownership.At the bottom of the market, the crisis is real and acute, as manifested in a sharp increase in homelessness and rough sleeping. The inescapable answer is to increase the depleted stock of social housing and widen eligibility criteria. An increase of 100,000 social units a year in England would help address this problem, as well as alleviate the financial squeeze on tenants of the private rented sector, whose number has grown sharply in the past 15 years in tandem with a steep rise in the housing benefit bill. Recent efforts to curb housing benefit have further increased distress, so it will be necessary to consider increasing benefits again alongside regulatory interventions with private landlords.In the home ownership market, recent government intervention has taken the form of the much-criticised Help-to-Buy Equity Loan scheme. This market policy to support new-build homes should be wound down and replaced by a scheme to endow all young people with a capital sum that they could use for second-hand homes as well. More generally, a more sophisticated approach to planning home-building is needed, both for assessing overall numbers and their regional distribution and in financing the supporting infrastructure.But none of these measures is a panacea for a housing crisis that is in large part a symptom of problems in the wider economy, such as low relative wages for young people, a lack of clarity about environmental issues, and failing places. A successful policy package to address the distorted structure of the housing market must also grasp the most difficult nettle of all – namely the way the tax benefits of owner-occupation incentivise overconsumption of housing and a widening wealth gap between renters and home owners, and between owners in different parts of the country. If we spend more to help those who struggle to afford decent housing, then it is only just to raise more taxation from those who benefit from restrictions on housing supply – whether through reform to council tax, a wider wealth tax or a limited form of Capital Gains Tax on principal residences.

Housing Access and Affordability in Rural England: Tackling Inequalities Through Upstream Reform or Downstream Intervention?

“…If at some point in the future a UK government decides to implement upstream solutions to the inequality and access concerns witnessed in many rural areas, it could do the following: charge CGT on primary residences (see Barker, 2014Barker, , 2019, causing a slowing of house price rises and managed deflation; increase capital gains on second homes to match an owner's PAYE rate (Mirrlees et al, 2011;Monbiot et al, 2019 -and committed to in the Labour Party's 2019 manifesto); and reform Council Tax, increasing liability for higher value property (Dorling, 2014) and transferring liability onto owners (Monbiot et al, 2019). Another possibility would be to abolish residential SDLT and make it part of the CGT liability.…”