Monday, 11 March 2013

How to make housing affordable in the UK

Green Party policy is that everyone has the right to a home. In the UK that is generally taken to mean the right to be a home owner.  But house prices in the UK are currently at an historic high. Price to income ratio is currently 30% above its historic average according to the International Monetary Fund. See: IMF Country Report No. 12/190 UK 2012 Article IV Consultation, available at
This leaves us with what the media have dubbed, the lost generation – young people who are unable to afford their own home and are ‘forced’ into the rental market:

The IMF has also looked at the ratio of the cost of homeownership relative to the cost/ benefit of being a landlord. In a comparison that views a ratio of 0 as a balanced system, we are currently at 20% plus. In other words, landlords are making a killing.

However, rents are also high making it virtually impossible for those renting to save anything towards a deposit. The obvious answer: regulated rents. This would solve so many problems. Lower rents would mean rent-to-buy landlords would not be interested in buying so many properties. Fewer interested buyers results in lower prices.

If landlords did still want to buy, lower rents would mean they would only be prepared to buy at lower prices.

Lower regulated rents would reduce the housing benefit bill and all the associated problems, including the inhumane bed room tax.

It’s an obvious common sense answer – which is why it’ll never happen under this government.

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