The Building Societies Association welcomes this opportunity to respond to the House of Lords Select Committee on Economic Affairs’ Inquiry into the UK Housing Market. In this response we argue that:
In general: A diverse housing market better preserves economic stability, by ensuring that housing supply is responsive to changes in the market and society more generally. Although we welcome the cross-party political commitment to significantly increase the supply of new housing, more attention should be given to providing homes across a range of tenures, types of housing and price points.
Government schemes: The Government’s focus on shared ownership is very welcome. While the Help to Buy equity loan has largely met its policy objectives to date, we would like to see careful management of London Help to Buy and a smooth transition out of the Help to Buy guarantee scheme.
Tax: Tax revenues should be hypothecated to keep housing for young people permanently affordable. We are concerned that the changes to inheritance tax have the potential to dis-incentivise downsizing. The Government might consider a publicity campaign around the tax credit in order to avoid this.
Mortgages: Although the changes to regulation implemented by the Mortgage Market Review have largely been positive, we are seeing some side-effects. However, what the mortgage industry needs now is a period of regulatory stability in order to focus on innovation.
Planning: While the National Planning Policy Framework has largely been a success, further measures could be taken to incentivise build-out of planning permissions. The issue of funding infrastructure is a particularly crucial one, though a further review of the Community Infrastructure Levy is likely to create uncertainty.
Private rental: The cumulative effects of the Government’s different policy measures on buy-to-let are likely to be significant. We are concerned, however, that tenants may be affected the most by the changes.
Rent restrictions: While some corporate ‘build-to-rent’ landlords restrict rents voluntarily, we would be concerned about rent restrictions being imposed on the wider market, which is largely made up of small-scale landlords.
Social housing: The policy intention behind the extended Right to Buy is clearly a good one – but achieving 1-for-1 replacement is absolutely vital in order to preserve housing associations’ asset bases. The cut in social housing rents is in danger of undermining private lenders’ confidence in the sector in the long-term, and in the short-term is likely to reduce development.
Read the full response here.