CBI business leaders have urged the government to tackle the housing crisis to meet their target of a million new homes by 2020.
The Confederation of British Industry (CBI) has made ten recommendations to tackle the housing crisis including expanding the rental sector and offering incentives to older homeowners to sell their larger properties.
As the UK population is set to grow by 10 million in the next 25 years, the types of houses built and the way they are delivered must be tailored to the needs and aspirations of those who will live in them, says the CBI.
By voting to leave the European Union this could serve to reinforce the sense of urgency with which this significant challenge must be met.
The government has recently announced a £5bn housing package to boost supply, and has reaffirmed its ambition to deliver 1 million new homes by 2020.
Incentives for older homeowners
There are fewer first time buyers, home movers and remortgage buyers among the younger generation as home ownership has plummeted.
In contrast, 80% of those aged 65-74 are homeowners and it is likely these people are now ‘empty nesters’, having seen their children leave the family home.
This means that a vast number of properties are potentially underutilised and it has been estimated that if just half the number older people that are interested in downsizing did so, it could free up 3.5 million family-sized homes.
For older remortgage buyers that are required to repay their loan by the lender, rather than downsizing and paying stamp duty tax, they can use equity release and agree a lifetime mortgage.
Greater consideration should be given to helping older people who are keen to move to smaller properties, such as specialist retirement homes and developments, which currently make up only 3% of new builds.
Help for first time buyers can come from older family members as the equity release mortgage buyer can access wealth to repay an interest only mortgage or maintain your standard of living.
The CBI has suggested these types of retirement homes could be made more attractive to both developers and potential residents with incentives such as Stamp Duty exemptions and collaboration with local authorities.
Private renters deserve more help
With the average age of first time buyers pushing the late thirties, it is no surprise that the proportion of people aged 20-39 privately renting has surged from 20% in 2000 to 50% today, says the CBI.
Generation rent is set to grow further still, reaching an estimated 7.2 million households by 2025.
Private renting is now harder after changes to Stamp Duty where 86% of buy-to-let landlords have no plans to increase their rental portfolio, according to the Royal Institute for Chartered Surveyors (Rics).
To tackle the housing deficit the government should improve the attractiveness and reduce risk in large-scale build-to-rent developments.
With deposits having increased five-fold since the late 1990s, schemes like the Help to Buy equity loan and mortgage guarantee have been helpful in enabling first time buyers with over 100,000 purchasing their first home.
Josh Hardie, CBI Deputy Director-General said as the demographic landscape changes, we must have homes in the right places that fit the needs of people who live in them, creating vibrant and attractive communities.
A flexible approach, will enable us to deliver the homes we sorely need, and which will drive productivity, boost growth and increase prosperity in every corner of the country.
What are your next steps?
Talk to our London City Mortgage advisers if you are an older homeowner releasing equity from your property, we can recommend the lifetime mortgage to access wealth for home or garden improvements and holidays.
At LCM our mortgage brokers can provide advice if you are a first time buyer, moving home, want to remortgage your existing home to a new cost effective mortgage deal or are a buy-to-let investor.
Start with a free mortgage quote or call us and we can take your details. Learn more by using the equity release calculator, property value tracker chart and mortgage monthly costs calculator.
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