Radical measures and a whole reform seem the only solutions to the current housing crisis in the UK.
There is an undeniable housing crisis in the UK. Not so long ago, in 2003, 71% of households owned their home, but in 2016, the number has reduced to only about 64%. This is the lowest level since 1986, when the housing market experienced a boom due to deregulation of the mortgage industry by Margaret Thatcher’s government. The situation is so serious that Theresa May warned that if this problem won’t be solved urgently, the majority of young people will lose the ability to have their own home. But the situation is not as inexplicable as it seems.
Since the housing-market-crash in 2008, although demand has been stimulated with various measures, supply has not followed the trend. This has been leading to a situation where the market is dominated by a number of inadequate and less affordable properties, while smaller and more affordable properties are amiss. This applies particularly to London. People today live differently and have different requirements than before and their incomes are much lower or are stagnated.
Given that real estate prices have risen dramatically these years and are now almost seven times higher than the average income, people have found themselves in a situation that makes them work all life, and still not have enough to purchase a house. Those who dare to buy a house under risky mortgage, with the fear of upcoming monthly payments, must pay, or risk losing the home. Currently, more than 8 million people in the UK rent accommodation, and 1.3 million are families with kids. The financial, lifestyle and psychological consequences are not new either. A higher cost of living, completely unstable lives, bad living conditions, and not to mention the affects on children who change schools every now and then with relocating to seemingly better neighbourhoods.
The proposed solutions are various. The first step is a Government-move, that there would be one million new homes by 2020 in the UK, which is approximately 250,000 houses per year. Many agree that it is a high and unachievable goal, citing last year’s number, of only 160,000 houses that were built. Another proposed solution is to change the tax system to stimulate building and construction, by giving investors the opportunity to purchase land at its real value instead of the future value. This would lower the costs of building, which will lower the final price of the property. The proposed land could be used for different purposes, for example social housing, family housing, or single housing, which is lately very often. Furthermore, the tiny piece of city’s greenbelt is also proposed to be used for new houses. If the infrastructure along transport routes would be better, this area could be appropriate for new houses as well.
The UK’s solution of cooperation between private developers and public housing is also seen as very productive in some other states who are struggling with the similar issues. Basically, the state would give loans to housing associations through bonds to private investors, which act as low-risk investments, because of the government guarantee. This is the primary reason for investors’ willingness to build affordable housing. This, of course, has many positive economic effects, such as an increase in employment, for example. The final result is the economic growth of the country and solving of many social and housing problems.