Some of the perceived demand for new homes is not actually a real need, but a want or desire – a fact that the big new home building companies wish the general population or government to conveniently forget.
For instance, somebody in rented accommodation wanting to buy their own property has a desire rather than a need for property ownership (in most cases). A homeless person requiring a house is a need.
Hence a glut of buy to let properties in a location (combined with a greater number of units being required due to divorce or extended life expectancy etc.) can create a shortage of other properties for the owner occupied sector. This makes it harder for persons to own their own houses and limits people from achieving their desires. It is not however creating homelessness.
The extent to which Government should give tax advantages to a private sector industry trying to address people’s desires, rather than their needs, is debatable.
Some aspects of the problem are clear, but the solution is less clear-cut.
Housing associations and house builders are pushing to build more homes, but many are arguing that the more pressing priority, rather than using up green spaces, is to bring back into use the streets of empty houses plaguing Britain’s major cities.
It is estimated that 700,000 homes lie dormant across the country, a figure which, if brought back into the market, would negate the detrimental effects of all of the points made in the body of this article. The Government has a £100m funding scheme for projects bringing empty homes back into use, but critics argue this is much too low and that its effects are negated by incentives to construct new homes, like the New Homes Bonus.
Of course, house builders are private companies and are interested fundamentally in profit. They often wine and dine those in Westminster to encourage release of land for new home construction on Green Field sites as it is most profitable, despite regeneration and refurbishment being better value for money and creating many more new homes per pound.
For the developers, regeneration and refurbishment provide less opportunity for large-scale profit and thus will always fall by the wayside until it is in the interest of house builders to do something about it.
Nonetheless, if new homes are to be focused on then perhaps they could be better funded. Second home owners could easily be made to pay a double or at least higher rate to compensate the local authority for having to create additional housing units for the local population. This additional rate could be ring-fenced for the local housing association’s benefit.
Although regeneration must be seen as the preferable option for Britain’s housing supply and prospective purchasers, the reasons behind the government’s focus on new builds are, to a certain extent, understandable. More than addressing the housing supply, they are creating a fiscal stimulus in an industry that remains labour intensive, particularly in mid to low skilled positions. With unemployment rates at 8%, particularly hitting young people, and negative growth in the last quarter, a strategy for growth has become the most important matter and perhaps we will have to wait a little longer to see the focus on refurbishment that the property market needs.