Comment: Now, more than ever, our property system needs root and branch reform
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Estate agent Simon Gerrard outlines his vision for the future of the property market in north London.
In the face of economic uncertainty following the decision to exit the EU, a well-functioning and well-resourced property system is a vital part of our preparations for the future.
The political party conference season recently drew to a close, providing us with a chance to reflect on the latest public discussions surrounding housing. Despite various new initiatives and schemes being deliberated, I do not feel any particularly inspiring creative solutions have been proposed by any party in an effort to solve a potential housing crisis.
The ability of our property system to adapt to changing economic conditions is crucial and to achieve this we need to become more nimble and creative.
Firstly, I believe the private rented sector (PRS) is a core aspect of the UK housing market and needs to be further supported by our government.
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The introduction of stamp duty changes by Osborne dis-incentivised professional investors from building up portfolios of rental properties and, in an effort to avoid continually increasing rents, this penal tax must be suspended.
We need to ensure professional landlords with more than three properties are offered the right incentives to scale up, increasing the supply of housing stock and ultimately generating income for the treasury. These steps are important for supporting Generation Rent, which looks set to stay.
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Within the PRS sector, not only do investors and landlords need more assistance, but we must also consider those building new homes and flats. Statistics released by the British Property Federation earlier this month show that the number of properties in the build to rent sector has jumped 200 per cent over the past year, delivering 67,000 homes. These encouraging signs show there is still an appetite to build, and for the build to rent sector to reach its potential more needs to be done to incentivise developers and investors.
The planning system is another key area where we must look to improve. The lack of stock currently available in the UK housing market is not caused by a lack of appetite from developers, but by an outdated and lengthy planning system designed to trip developers up.
Getting past the first stage of registration is just the beginning of the battle: does it seem logical that Local Planning Authorities have no set deadline in which they have to validate applications? Often developers are left waiting, effectively losing money, for months at a time just to register interest. Streamlining and accelerating our planning system will allow house builders to develop the stock the market needs.
At the Conservative Party conference Sajid Javid announced two funding packages, promising billions to help fund housebuilders. It is positive to see recognition that not enough homes have been built in the past, but although these initiatives will be welcomed by large scale developers, those at a middle level will not reap the benefits.
In north London, where there aren’t large pockets of lands available to develop, smaller boutique builders must be encouraged to take on smaller sites. The perceived complexities of applying, and the challenging timeframes for delivery and repayment have discouraged smaller developers from applying to similar schemes in the past, and these problems will surely rear their heads again. Those entrepreneurs building one or two properties are important for our housing stock throughout north London and we therefore need to address these issues.
Ultimately we need more creative solutions to the various challenges that our housing market faces. A stamp duty reversal would help professional landlords hit by both Obsorne’s tax changes and our impending Brexit, whilst more funding needs to be redirected towards boutique developers to get them building in our cities. The government and property industry must come together to think outside the box and develop the best solutions to help support a fundamental pillar of the UK economy.
Addressing the challenges outlined above would boost our local market and the UK property industry as a whole.
Simon Gerrard is managing director of Martyn Gerrard estate agents.