Comprehensive Spending Review 2020: Government economic support for the housing market

Responding to the Comprehensive Spending Review 2020, Propertymark highlights the requirement for the UK Government to invest in appropriate infrastructure and innovation, to level up economic opportunity.

To aid the country’s recovery from the Coronavirus pandemic and have a knock-on effect on the wider economy, Propertymark’s response focuses on financial support, more affordable rental properties, further cuts to Stamp Duty Land Tax, and better accessible home ownership schemes.

Private rented sector (PRS) support

The UK Government must recognise the contribution that the private rented sector makes, and it must provide more support so confidence and investment in the sector are maintained. To boost the supply of private rented housing and increase long term investment in the sector, financial support for tenants and landlords must be provided. This should include three things, firstly, analysis of the impact of recent costs, tax, and legislative change on buy-to-let investments to commit to launching a review of all taxes relating to private landlords. Secondly, provide financial support for renters hit by the Coronavirus pandemic to sustain tenancies and #keeptherentflowing, and thirdly, increase the support for landlords to invest in their property and make energy-efficient home improvements.

Evictions

The ability for landlords to access a swift, efficient, and cost-effective justice system is a key component of a successful lettings industry. Propertymark has called on the UK Government to adequately resource and reform the existing court system to ensure that courts in England and Wales deal with the volume of possession hearings following the stay on evictions. Failure to fund the courts properly means a lack of justice for landlords and tenants and without sufficient court infrastructure, this can lead to delays and inefficiencies.

Universal Credit

Propertymark believes tenants should have a choice over whether the housing element of their Universal Credit (UC) is paid directly to their landlord, all claimants should be able to choose whether to have UC paid monthly or twice monthly to assist with budgeting. Additionally, to tackle rent arrears the UC advance should be turned into a non-repayable grant from the first day of the claim.

Local Housing Allowance

Raising and restoring the Local Housing Allowance to the 50th percentile to cover the average cost of rents in a local area must be done. The housing element of UC currently only covers the lowest third of market rents in an area, meaning those paying average rents will face a large shortfall. By lifting the Local Housing Allowance rates further this will make more homes affordable to renters and ensure landlords and letting agents have more confidence to let to renters claiming UC.

Social Housing

The UK Government must commit to a significant programme of building social housing, this will address the long-term solution of the lack of affordability in the PRS. The demand for social housing has far outstripped availability, meaning that many people who most need affordability now live in the PRS.

Read Propertymark’s full response

Residential sales support

Propertymark understands that homeownership provides an increased sense of stability and security to people’s lives. Regardless of COVID-19, many families still want bigger homes, empty nesters still want to downsize, and first-home buyers still want to make the most of record-low interest rates. The only way that more people can become involved in the house buying process, is if equal opportunity is continued to be given across all nations and regions of the country.

Extend Cut to Stamp Duty Land Tax

To further support homeownership and the economy, Propertymark proposes the UK Government extends the temporary increase in the stamp duty threshold to £500,000 for property sales in England and Northern Ireland, for at least another six months beyond 31 March 2021. Moving to a new home has enormous knock-on benefits for the wider economy and a continued holiday on property tax would increase consumer confidence and encourage both upsizing and downsizing.

Mortgage Guarantee Scheme

Propertymark suggests a government-backed mortgage guarantee scheme to lenders, which provides loans to borrowers of up to 95 per cent Loan to Value (LTV), allowing key workers to purchase homes with smaller deposits, and low deposit mortgages. This will help more key workers to get onto the property ladder, ensuring they can live in high price areas and are provided with additional support in appreciation for their dedication to public safety during the Coronavirus pandemic.

Empty Homes Community Grants Programme

To effectively reduce the number of long-term vacant properties, Propertymark proposes the UK Government establishes a £200 million Empty Homes Fund to reintroduce the Empty Homes Community Grants Programme to community groups. By reducing the number of empty properties, communities can be regenerated in blighted areas, housing conditions can be improved, an increase in the Council Tax collection rate, and produce savings on temporary accommodation expenditure.

Read Propertymark’s full response

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Main article photograph courtesy of Pixabay