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Time for Government to Hear Some Home Truths on Housebuilding

Jasmine Whitbread, chief executive, London First

The UK needs to start building 300,000 new homes every year to keep pace with demand and give people a place to call home. The Prime Minister has called on homebuilders to “do their duty” and build them.

But housebuilder Berkeley has just warned that market conditions make it impossible to increase supply beyond its current plans. Not an easy thing to say.

So how do you start building more homes when market conditions clearly don’t encourage it.

It might be easier for the government to rely on the private sector were it not simultaneously bleeding it dry. The buy-to-let tax regime is putting landlords off investing in new build projects – the same landlords who once could be relied upon to help drive demand for developments and support the cashflow of builders. Stamp duty land tax is putting off potential buyers at the top of the market, clogging up the rest of the market and making it harder to downsize.

The fact that the government is reliant on the private sector might be less important were it not failing to invest its own money.

If the government wants to see a significant increase in housing – and affordable housing in particular – it’s going to have to pay for it. While the £15.3bn of new money over five years promised in the Budget is welcome, it only works out at £3bn per year. According to the government’s own calculations, that will only build 37,500 new homes a year, across the whole of the UK. To put that in perspective, the Mayor’s annual housing target for London alone is 66,000 homes a year.

The government is also failing to put in political capital and time, as well as money. While no one questions the value and importance of the Green Belt, outdated classifications are too often protecting disused sites that are far from green and pleasant.  We would better serve the UK’s needs by introducing locally-led Green Belt Reviews that lead to sustainable, well-designed homes close to transport with truly accessible green spaces.

Acting now and investing public money in housing will not only give people somewhere to call home, it will drive economic growth and create jobs – just what we need to put the UK into the best possible position for Brexit.

Building homes means building transport links and connecting utilities. Vital infrastructure investment the UK needs. According to the OECD, UK spending on infrastructure is around 2% of GDP, half of what is spent by the likes of France, the US and Canada. Investing in infrastructure is proven to create growth – the International Monetary Fund has shown that a 1% increase in spending will increases the level of output by 1.5%.

The government needs to make some tough decisions about making more land available and spending public money.

To date, Theresa May has only put a down payment on tackling our housing crisis.

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