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22.12.16

New council homes ‘desperately needed’ as ownership figures continue to fall

Action is needed to deliver more council-built housing as affordable housing has plummeted, according to the final report of the LGA Housing Commission.

Research by the LGA found that home ownership among the younger generation has more than halved in recent years, with only 20% of 25-year-olds owning their own home compared to 46% in 1996.

The LGA called on the government to use its Housing White Paper to restore councils’ historic role as house builders.

Cllr Martin Tett, the LGA housing spokesperson, said: “The housing crisis is complex and is forcing difficult choices on families, distorting places, and hampering growth. But there is a huge opportunity, as investment in building the right homes in the right places has massive wider benefits for people and places.

“There is no silver bullet and everyone must come together to meet the diverse housing needs in our villages, towns and cities.”

He added that the government’s Housing White Paper is an opportunity to boost housing supply and affordability, but it must also “recognise that a renaissance in housebuilding by councils will be crucial to helping ensure the mix of homes to rent and buy that are affordable for those people that need them”.

“This means powers and funding given to councils to replace sold homes and reinvest in building more of the genuinely affordable homes our communities desperately need,” stated Cllr Tett.

The LGA report showed that home ownership is significantly cheaper than renting. Private renters spend an average of 34% of their income on rent, and social renters spend 29%. In contrast, mortgage holders spend 18% of their income.

However, it is now much more expensive to get on the housing ladder, with an average deposit making up 62% of an annual income, and 131% in London. This leaves first-time buyers increasingly turning to the ‘bank of mum and dad’, with the children of home owners more likely to be able to afford their own property.

Overall home ownership has fallen by 4.4% since 2008, while private renting has increased by 5.1%.

A DCLG spokesperson defended the government’s record on home building, saying: “We’ve halted the decline in homeownership, with the number of first-time buyers up nearly 60%, and over 335,000 households helped into homeownership through government-backed schemes since 2010.

“We’ve also set out the most ambitious vision for housing of any government since the 1970s, investing £9.4bn over the course of this Parliament. Our upcoming Housing White Paper will clearly set out how we plan to build the homes this country needs.”

Earlier this year, communities and local government secretary Sajid Javid and chancellor Philip Hammond announced a government commitment to build 25,000 new homes by 2020 at the Conservative party conference, and a further £7.2bn was promised to support new homes in the Autumn Statement.

The LGA predicted that the government would meet its housebuilding targets, but that an increase in housing stock could take “many decades” to improve the affordability of homes.

It therefore urged the government to provide greater support for affordable home builders, recommending that it abolish restrictions on council borrowing to build homes, such as removing Housing Revenue Account (HRA) borrowing from contributing to public debt; refocus the Housing and Planning Act on building a range of different tenures for local communities; and enable councils to rapidly replace homes sold through Right to Buy.

A different report from the LGA, published in August, showed that replacements for homes lost through Right to Buy have fallen by over a quarter in the past year.

In addition, the Association said that providers of affordable rented housing should work more closely with local Jobcentre Plus services and pilot ways to financially reward housing providers who support tenants into work, in order to make it easier for economically disadvantaged households to increase their earnings.

Furthermore, the LGA warned that current housing stock is unsuited to the needs of an ageing population. Between 2008 and 2039, almost three quarters of projected household growth will be made up of properties with someone aged 65 or older.

The LGA called for a greater focus on integrating housing, health and social care services and more funding for amendments to older people’s homes, saying that providing more suitable accommodation for older people would reduce unnecessary hospital admissions.

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