Help to Buy: a new version is needed to boost housing demand

As featured in Green Street News, Hallam Land's Managing Director, Nick Duckworth, shared his thoughts on the current state of the UK housing market and the recent reforms within the National Planning Policy Framework.

If there is one `growth lever’ that Labour could pull and which the Conservatives had avoided it was pressing local authorities to support more house building, and while the government has struggled in some areas there is no doubt that it is firmly committed to overseeing 1.5 million new homes.

But there is much more that Chancellor Rachel Reeves could achieve to really get the housing market moving. Increasing housing supply is very welcome, but much more needs to be done to help homeowners struggling with higher interest rates and affordability, as I will go on to explain.

First, though, the good news. The rewritten National Planning Policy Framework, which has reintroduced local authority housing targets, is logical, sensible and a dramatic change from former Communities Secretary Michael Gove’s rash decision to scrap housing targets in December 2023.

This was a naïve, short-term measure, which did nothing to help the Conservatives win last year’s election and which brought large parts of the planning system to a standstill for a year as councils rowed back from their obligations.

Now local authorities which go against officer recommendations run the risk of facing appeals which can result in significant six figure cost claims against local authorities for unreasonable behaviour: not an appetising prospect at a time when council budgets are already under pressure due to rising social care costs.

For planning applications which go to appeal due to non-determination it is important that the Planning Inspectorate, which will adjudicate on these cases, is properly resourced as well.

The new definition of `grey belt’ is also positive, liberating unused land around cities which has sat vacant for decades and which provide much needed new homes and amenities.
But there is an unspoken other half of the equation.

What if the government sets local authorities new targets, encourages development of grey belt and a wave of applications win on appeal – and the number of new homes being built does not grow because the demand for them is too weak?

Of course, there is demand for new homes: we have a structural under-supply in the UK’s housing market, particularly in London and the south-east.

But that doesn’t mean that the conditions exist for a strong housing market, because many people are still struggling with the cost of living, the high cost of renting and raising cash for a large deposit.

House builders, having learned to their cost the price of speculatively building city centre apartment blocks and finding them hard to fill, have in many cases shifted to edge of town locations and will only build according to demand.

So if the government is really determined to pull the `growth lever’, why not create its own version of the Help to Buy equity loan scheme perhaps called `Loan-to-Own’?