1. The Politics of Housing Supply Kate Barker Housing Studies Association Conference April 9 2015

2. Outline What are the objectives of policy? How far are these objectives being met? Policy choices and policy levers:  Supply versus environment  Where to locate supply?  Can the market meet demand?  Government intervention in the land market  The case for housing tax reform Political barriers to effective action

3. Policy Actions Labour:  Regional planning  PPG3 to PPS3 – land supply focus  Social housing grant  FTB support schemes Conservatives:  Localism/City Deals  NPPF  Affordable rent regime  FTB support schemes

4. Political Objectives Labour:  200,000 homes by 2020  Use it or lose it  New towns and Garden Cities Conservatives:  100,000 starter homes over 5 years  10,000 sub-market rent  Extend Help to Buy

5. Other Objectives Decent homes for all Housing mobility Well-regulated private rental sector Adequate social rented supply Planning response to market signals Less volatile housing market More equitable access to home-ownership

6. Objectives met? New supply fails Source: CLG UK Housing Completions

7. Three Effects of the Financial Crisis Fall in growth of effective demand:  demand reflects incomes as well as households Greater regulation of the mortgage market  mortgage market review; Financial Policy Committee Fall in supply capacity  decline of SME builders; supply of materials; skill shortages

8. Mortgage Rates Continue to Decline Average quoted household interest rates (a) Source: Bank of England Inflation Report February 2015

9. Housing more affordable than pre-crisis? Sources: Bank of England, Halifax, Nationwide, ONS and Bank calculations.

10. What happens to excess households? Household formation partly endogenous - young people 90,000 more each year/concealed households; ONS projection assumed household size falls - migration estimated at 30% of growth Space within stock - 635,000 empty homes (2013) - 216,000+ long-term empty (over 6 months) - 1.1 million over-crowded households - 8.1 million under-occupied homes

11. The key policy issues/choices More generous housing vs land take, water, energy, waste and materials Costs/benefits of regional economic imbalances and housing provision Garden cities/urban extensions/public land: locations and local support? Infrastructure spending/fiscal constraints

12. Changing financial incentives Taxation problematic  Property taxes: Council tax/inheritance tax/CGT unpopular and complex  Land taxation: Development taxation efforts complex and ineffective CIL/S106 viability issues PRS: regulation and rents

13. Summary Policy proposals suggest big issues will again be avoided Supply constraints not just ‘planning’ Next government will need to act fast to boost supply; key choices are:  Continue as is  Force through garden cities and urban extensions  Tackle tax More likely to stick to FTB stimulus and (?) rent controls