At the beginning of 2017, the Government launched a housing white paper, laying down the foundations for a long-term strategy to address the challenges facing the housing market. With demand outpacing supply, the white paper was received as a step in the right direction. Unfortunately, after turbulent a year of political announcements, election shocks and cabinet appointments, the rest of 2017 failed to live up to the expectations set at the start of the year.
Thankfully, 2018 could be the year that the issues consuming the UK’s residential market begin to get resolved. Following on from her pledge to solve the housing crisis and make housing an affordable reality for more people, Theresa May chaired the inaugural meeting of the Housing Implementation Taskforce in early February, and emphasised the need for wide-sweeping reform to ease the housing shortage.
As part of its attempts to tackle the housing shortage currently plaguing Britain, the Government also this week announced new changes to house planning laws in a bid to increase the number of available properties on the market. The reformed planning laws will encourage local councils to approve proposals to extend homes, apartment blocks, shops and offices by additional two storeys in urban areas. To be included as part of the revised National Planning Policy Framework draft, which is due for consultation early this year, the Government has heralded this measure as a creative way of addressing the housing crisis. But how exactly will it impact the property market?
For homeowners, adding extra storeys to a property is an effective way of adding value, and can sometimes serve as an ideal solution for those seeking a larger home but struggling with rising house prices. At the same time, these reforms will ensure that buy-to-let landlords and developers can also increase the amount of rooms available to rent in competitive markets such as London. In light of these benefits, reformed planning laws make sense; rather than building new residential developments on the outskirts of cities where local infrastructure may not be sufficient, there is now an opportunity to take advantage of available space in popular urban areas.
Extending upwards to address housing demand is something that we have already seen implemented in major European cities. While respecting the height restriction laws currently in place which protect the heritage integrity of the city, developers have taken advantage of Paris’ planning laws to add additional storeys in popular neighbourhoods. Similar trends are also being seen in Barcelona, and there’s no reason why the same approach cannot be seen in London and other cities across the UK where demand for housing is high.
While the Government’s reform to planning laws is something that should be welcomed by the industry, it is not a solution in itself. Rather, this reform is just one of many creative approaches that can be employed to ease housing demand, and should be informed by a longer-term strategy. The upcoming Spring Statement is an ideal opportunity for the Government to make further progress, including reforms to stamp duty so that current homeowners are better placed to move up the property ladder, and other initiatives to increase housing supply. Based on the policy announcements so far, there is room for optimism; however, it is important that fresh policies continue to be introduced throughout 2018 and beyond.
Paresh Raja, CEO of Market Financial Solutions