The UK Housing Crisis

What is the UK Housing Crisis and how is it having an impact on the housing sector?

There is a housing crisis in the UK. In every area of the country and in every price bracket, there are many people who are cramped into a property which is too small. There are others rattling around in a property which is too big. There are some who are condemned to homelessness.

One reason for this is the cost of moving. On top of fees, most buyers will have to pay stamp duty (SDLT). On the current average UK house price of £278,979.00 the SDLT is £3,948. On a house costing £500,000 (much nearer the average price of a property in Hertfordshire) SDLT leaps to £15,000. On a property costing £1,600,000 (of which there are very many in and around London) the SDLT is an eye watering £105,750.00. The rates are evidently too high and are hindering not helping the government to raise funds - receipts for the first quarter of 2019 were down by 26.2%.

Because people can’t afford to move there are blockages at every rung of the housing ladder. Professional couples put up with their one-bedroom flats, growing families convert the loft in their 3-bedroom semi rather than moving to a 4 bedroom detached, and empty nesters are put off from downsizing.

To add to the shortage of existing properties on the market, not enough new houses are being built. In the 2017 Budget, the government raised the target for new homes to 300,000, despite the fact that the previous target of 250,000 was never met.

Residential developers would love to build more houses and smash through the 300,000 target, but development is not as easy as the government seems to think. The planning system is slow, tortuous and unwieldy. Applying for planning permission is expensive and, in some areas, the fees are more of a gambler’s stake than a sound investment in a project. Due to local government cuts there is a shortage of planning officers and the system is full of traps for the unwary or even the experienced.

If a developer secures planning their hard work and headaches are by no means over as construction costs are high and it is expensive to comply with health & safety regulations (canteens, shower blocks etc). Some developers are put off by affordable housing requirements which are typically between 25% and 35% of the units on any site. Perhaps unsurprisingly, only 192,000 new homes were built last year.

At the other end of the scale from the people who have to pay a fortune in SDLT are people with no permanent housing at all. On any single night in the UK 4,677 people sleep rough. Many hundreds of thousands of others (including children) are housed in unsatisfactory temporary accommodation. This might be an overpriced but poor quality private let or a dirty room in an emergency B&B which a young tenant is too scared to leave at night to use a shared bathroom down the hall.

Cuts to housing benefit and reduced funding for homelessness services have exacerbated the crisis for the most vulnerable in society. There is not enough affordable housing in the UK and a lot of what there is not truly affordable to those on low incomes.

Some solutions to the crisis seem obvious: Reduce SDLT so that it is no longer a barrier to moving and existing housing stock can be used more efficiently; Speed up and simplify the planning process so it facilitates rather than hampers development; Allow more building on Green Belt (a lot of which is not the rolling countryside term conjures up); and make sure many new homes are genuinely affordable. Unfortunately, none of these solutions is on the horizon and the UK must endure housing shortages at every level for a long time to come. 

CONTACT JACQUI

If you would like more information or advice relating to this article or a Real Estate law matter, please do not hesitate to contact Jacqui Button on 01727 798086.

© SA LAW 2019

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