Why do we need new homes (revisited)?

New house building NewcastlePropertySurveying.co.uk originally published an article under the heading ‘Why do we need new homes’ in 2012, and it remains one of the most frequented of our newsletter pages. Many of the problems identified six years ago still stand today:

  • There was a chronic shortage of homes, and the government and house builders were telling us the solution was to build more new properties.
  • The government said it would release more of its own land for the development of new towns.
  • The New Homes Bonus was introduced, to bring about the new homes that Britain so desperately needed.

So we asked the question – why does Britain need new homes, and is building more brand new homes the answer? Here’s an update on the answer to that question.

Single Occupation

There are plenty of reasons for under-occupation of homes, not least the shift from multi-generational families living under the same roof. In 2012, we reported that the UK had the fourth highest rate of divorce worldwide, at 3.08 per 1000 population. In 2016, that figure increased to 8.9 per 1000 population – but there was also a decline in marriage, with the ‘cohabitation revolution’ growing in popularity, especially among the 16-29 age group.

The cultural shift of ‘flying the nest’ at the earliest opportunity still exists, whatever the reason.

Life Expectancy

In our last review, we told you that the life expectancy for males in the UK was 78.2 and for females 82.4. In 2014, those figures had increased to 79.5 and 83.2 respectively – showing that the gap between male and female life expectancy had decreased. We’re living longer, meaning more pensioners and greater pressure on housing provision, particularly as the trend towards living independently (thus, potentially, alone) has grown stronger.

Second Homes

In 2011, figures showed that across Britain there were 246,494 second homes; homes that lay dormant for months on end, unoccupied when thousands of potential homeowners wish to take their first steps onto the property ladder. The number of second homes has risen 30% in the last ten years alone.

In areas around the UK, substantial numbers of homes are lying empty. In the Yorkshire Dales that includes 10% of all housing stock, in St Ives, Cornwall the figure is more like 25%. These areas are hugely impacted by homes standing empty, often become ‘ghost towns’ while local young people are unlikely ever to be able to afford to buy in their home towns.

Local councils now have the power to double Council Tax on second homes – but does the government really believe this will make much difference to people who can afford to have property sitting empty?

Second Home Owners

House builders lobby for as much help as they can from Parliament, campaigning for lax planning restrictions and other economic advantages, yet many of their sales are to second home owners or buy-to-let investors.  With their professional lobbyists in Westminster, they have the ability to shout loudest and longest.

The Local Authority area with the highest proportion of second home ownership elsewhere or Local Authority with second homes is, of course, the London Borough of Westminster.


In 2012 net migration into the UK stood at around 177,000 people (the equivalent of a city the size of Swindon). Fewer people leaving and Polish workers arriving accounted for many of them. The figure grew to 332,000 in 2015.

But in June 2016 there was Brexit, and the net migration in the year ending June 2017 had reduced to 230,000. It is too soon to predict whether immigration will continue to drop at this level, but with decreased population from both EU and non-EU countries, it is also too soon to know whether the resultant pressure on housing supply will be as significantly affected as it has been.

Investment Properties

Like second home ownership, Buy to Let properties put pressure on house prices, making them less affordable and removing the opportunities for potential homeowners to get on the ladder.

Around one in 30 adults (and one in four MPs) is estimated to be a Buy to Let landlord, many of them retired and enjoying their investment as a pension. The market has grown since 1996, when mortgage companies no longer required borrowers to live in the mortgaged property, and the proportion of Buy to Let properties has grown every year since.

Recent regulatory changes may have begun a reversal in the trend. Increased stamp duty, interest rate changes, inflated house prices, and the abolition of ‘wear and tear’ allowances have all taken their toll on Buy to Let landlords, and capital gains tax changes have now come into force.

The government hasn’t yet addressed the tax relief that second homes attract if they can be considered a business. Business rates are not payable on a property with a rateable value of £12,000 or less. And for properties with a rateable value of £12,001 to £15,000, the rate of relief is graduated between 100% and 0%.

While the age of the independent landlord may be coming to a close, there is every likelihood that institutional investors will take their place. There is no shortage of tenants who want to own their own home, but for most it is not that the homes are not available, it is that the cost of the purchase is beyond their financial capability.

With an estimated 800,000 ‘spare’ homes now dormant around the country, surely the argument that we need to build more new homes must be revisited?

Why aren’t we investing in communities, such as recently reported in Stoke on Trent, with vast numbers of empty housing stock?

Regeneration and refurbishment are better value for money and create many more new homes per pound – but they 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.

There is a ‘chronic shortage’ of homes, according to house builders. House builders are out of business if they say there is no demand for their product.

There is a demand for some new house building but the situation is far from ‘chronic’.

There are people who want to buy they own homes. That is not a shortage of housing because those people are living somewhere today – in rented accommodation or perhaps with parents. If they are living in rented accommodation, there is no demand for an extra unit of housing – it is a question of affordability.

Back to January 2018 Newsletter

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