Last week’s budget was another missed opportunity from the government on housing. Rather than gimmicks such as the stamp duty changes, which even the Office for Budget Responsibility has said will only serve to push up house prices, and yet another new target for 300,000 new homes to be built each year, the chancellor should have looked at what can be done to bring rents down for the growing group of people for whom buying is not an option.
To highlight the scale of the problem, earlier this year the Royal Institution of Chartered Surveyors predicted that rents will increase by just over 25 per cent over the next five years.
There is nothing to disagree with in the 300,000 target — we do need to build more homes — but to seasoned observers all this talk feels like too little too late. Looking at recent figures highlights how far behind we have been as a nation and makes one wonder where these new homes are going to come from. Last year the most new houses were built in England since 2007 and the figure was just 184,000. Between 2010 and 2016, the number of new homes hovered around the 100,000 mark, barely a third of what has been needed.
More concerning than the focus on arbitrary targets that look doomed to being missed is that even now our leaders seem to be fixated on the wrong housing priorities. Rather than pouring money into Help to Buy schemes, which have been criticised by economists for focusing on demand not supply and for helping the wealthy, ministers should reframe the conversation and accept the fact that for a huge proportion of under 40s renting is now the new reality.
It is a fact that the number of people renting is growing at the fastest rate the country has seen. Just 26 per cent of those aged between 20 and 39 will be on the housing ladder in 2025 and the situation is more acute in London where 60 per cent of the population will be renting within a decade.
I co-founded Ideal Flatmate, a flatsharing platform designed to match up compatible tenants, two years ago and the assumption was that our users would be students and young professionals. Our fastest growing user group in London however, is the over 35s, with 32 per cent of our users now falling within this category.
Indeed, the average age of a flatsharer across the UK is now 32 and the fastest-rising age range is those between 45 and 54, which has grown by 300 per cent in the last five years.
The government should stop talking down to this growing group and announcing expensive gimmicks to suggest it will become somehow easier to find a place to buy. In reality, especially living in London, unless you are taking home an outrageous salary or can rely on help from the Bank of Mum and Dad, you are not going to be buying any time soon.
It is not, as some have claimed, the fault of millennials, and no amount of abstaining from avocado on toast is going to help. Instead, the government should be reversing some of the wrongheaded policies which have hit landlords hard in recent years. These have served only to push up rents and discourage good landlords from making improvements for tenants.
What the chancellor should have done last week was to reverse section 24 of the Finance Act 2015, which has imposed a pernicious tax on landlords where tax can exceed income (creating an infinite tax rate). No other business owner would be forced into this situation. It is unsustainable and is a key reason that rents are going up so quickly in the private sector. This is not, as some claim, going to line the pockets of landlords, but to help pay the astronomical bills they are now facing.
If the government is able to reach the sort of house-building levels it promised last week then we will all be applauding them, but in the meantime it needs to do more to support today’s renters.
This article was originally published in TheTimes.co.uk.