The Labour Party’s Lyon’s Housing Review

Our latest NAEA Housing Marketing Survey shows a continued slow-down in the supply of properties for sale. Our latest report shows that the number of properties for sale during December decreased by 7.9%, from 51 in November, to 47 in December – the lowest number recorded since July 2007. By contrast, there is a record number of house hunters since May 2007 – up 14.4%.

We firmly support the Labour Party’s plan to increase the supply of new homes in England above 200,000 a year by the end of the next Parliament. To deliver this, not only will a fundamental reform of the planning rules and supply mechanisms in the market be required – which this review is principally focused on – but also a wholesale reform of the demand and institutional investment side of the market.

Whilst the call for evidence was correct to identify the chronic shortage of new homes being built, it also ignores a number of other key concerns amongst potential buyers and renters, namely: the lack of investment in the private rented sector (PRS); the size of the deposits needed; levels of Stamp Duty; the expense for existing homeowners to move; the quality of rental properties; and the stability of the market.

All these concerns represent key barriers to increased house building. For example, the current Stamp Duty structure severely restricts demand from first-time-buyers struggling with a deposit. Furthermore, developers may be less inclined to build, on a large scale, homes of a certain size or value, due to the relatively poor return on investment at certain thresholds, caused by the slab structure of Stamp Duty.

However, perhaps the most significant barrier to institutional investment in the housing sector – particularly the PRS – is the lack of comprehensive regulation and the impact this has on the lettings and management sector.

The full consultation can be found here.