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Lord Flight is Chairman of Flight & Partners Recovery Fund, and is a former Shadow Chief Secretary to the Treasury.

The main domestic policy which helped keep the Conservatives in power in the second half of the 20th Century and especially under Thatcher was both supporting the principle of Britain being a property owning democracy, and also making it continue to happen.

In the 1980’s we achieved in excess of 70 per cent of the population owning its primary residence.

The last 20 years have seen house prices increase to levels pricing many out of the market. As people need to be housed, notwithstanding prices, this in turn led to a major increase in the buy to let market, providing in total some eight million housing units. Much of this had been achieved by entrepreneurial individuals spotting local opportunities.

While it was under the 13 years of Labour Government that the property owning democracy started to decline, measures taken by the Conservatives since returning to power in 2010 have messed around with the housing market, in several areas causing serious harm.

It has been clear for some time that it is the supply side which has been allowed to get out of kilter, largely as the result of cumbersome planning laws and requirements. If supply is less than demand for a continuous period of time, it is not surprising when house prices go on rising.

The Government’s measures to streamline the planning process have had only mixed success. A lot of the ‘Interest Group’ environmental requirements, complicating the planning process – for example ‘bats in the loft’ – have not been sensibly simplified and are causing serious supply side pressures.

The shortage of supply is likely to see rent rises of three per cent per annum over the next few years as the result of the demand for new homes outstripping supply.

Where I would have thought the most important thing for Government to be doing now is increasing the supply, we are now seeing measures which may serve to worsen the supply shortage further.

The major growth in the private rented sector with children living within it has led to much greater scrutiny of how the sector operates. It is vital that tenants and landlords both have the confidence that they can ensure their respective rights are upheld in a timely and effective way through the courts. The evidence shows, however, the court system failing to ensure that this happens.

What is needed is the establishment of a single, dedicated housing court as a matter of urgency. As the sector grows it is vital that tenants and landlords both have the confidence that they can ensure their respective rights are upheld in a timely and effective way including through the courts.

For tenants the system is far too complex. The web of different types of courts and tribunals enforcing the laws can make it difficult for a tenant to navigate the system. As a previous report by Citizens Advice noted: “the time involved in taking a disrepair claim to court puts off just under half of tenants whose landlord took longer to complete repairs than is normally reasonable”. More than half said the complexity of the process stops them.

For landlords who seek to repossess a property through the courts, for reasons such as rent arrears or anti-social behaviour by the tenant, it can take many months between applying for an order to it being enforced. Such lengthy legal limbo is not good either for the landlord or the tenant. Figures supplied by the Ministry of Justice in response to a written question from Kevin Hollinrake MP show that the average time to progress from a claim in possession in 2017 was 22 weeks across England and 25 weeks in London.

The Government has announced its intention to overhaul the way that landlords regain possession of their property to provide greater security for tenants. While it is fair that no landlord should evict a tenant without good cause, it is deeply worrying that the Government’s plans could lead to new forms of rent control.

Finally, under George Osborne’s period as Chancellor, the Treasury persuaded him that increasing the tax burden on smaller buy-to-let operators would reduce buy-to-let activity and so make available more properties for owner occupiers to buy. This has ignored the evidence that there is very little competition for the same properties between buy-to-let and owner-occupier purchasers.

The decision in 2015 to restrict mortgage interest relief for the sector was a big mistake. The argument that the tax system favoured landlords over and above home owners was simply wrong, as the Institute for Fiscal Studies noted at the time. The main effect has been to reduce the supply of buy to let properties, where as a result rent levels have increased. For the time being the priority should be to increase the supply of residential properties, and the best bet to this end is still buy-to-let. But we are in a crazy situation where landlords wanting to add to the net supply of homes to rent are being stung by an extra three per cent stamp duty.

The Government’s schemes for first time buyers are surprisingly generous, but can be no more that a short term palliative. It is blindingly obvious that what is needed is an increase in supply of residential property, which in turn needs both considerable streamlining of the planning system and a more positive approach to private sector landlords.

38 comments for: Howard Flight: Ministers must embrace supply-side reform to revive home ownership

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