The latest report commissioned by the Labour party to resolve the UK’s housing problems would crash the housing market rather than resolve it.
That’s the view of the head of property management firm Apropos by DJ Alexander.
David Alexander, joint managing director of the firm, believes the party’s latest report - ‘Land For The Many’ - simply doesn’t understand the key issues affecting the UK property market and provides solutions which would only exacerbate the problems.
The report believes that land prices are at the heart of the current housing problems and that by taxing financial gains individuals make on their personal properties, this would re-align the prices in the market and make property more affordable to a wider number of people, reducing the requirement for a large private rented sector.
The report states that applying Capital Gains Tax on the sale of privately-owned homes would generate £28 billion annually for the government.
This money could then be used to fund affordable house building, with Labour committing to build 100,000 new homes a year for the next ten years.
“The current housing problem revolves around several key misconceptions about what has happened over the last decade” insists Alexander.
“Home ownership peaked in 2007 but we know this was based on loose lending and an overheated property market, resulting in a property correction in the following years. However, to say that home ownership is at an all-time low is inaccurate” he insists.
“There are now 64 per cent of the UK population who are owner occupiers which is lower than the 71% peak in 2007 but there are few who would wish a return to such a period of reckless lending. Many who are unable to get a mortgage now would have been unable to get a mortgage 20 years ago” he adds.
Comparing lending conditions now with 2007 is a mistake, Alexander believes.
“Lending criteria have tightened and this is beneficial to individuals and to the market, which despite what some believe does not welcome enormous peaks and troughs in values.”
“Furthermore, pressure is being placed on the housing sector due to the increasing population caused by increased immigration, longer life expectancy, and a trend for more people living on their own (an increase of 21.1 per cent over the last 20 years).
“The UK population rose to 66m by 2017 and is forecast to increase to 73m by 2041. This is a rise of 291,666 every year for the next 24 years so even building 100,000 new affordable homes per annum, which is ambitious, will not keep up with the projected rise in demand.”
He concludes: “Any tax on homeowners’ capital gains will result in a collapse of engagement in home ownership - which we should remember accounts for two thirds of all voters - [plus] a reduction in lending from banks who will see loans as more insecure without increased capital growth to protect their investment, and simply states that wanting to grow your wealth in any way is viewed as a bad thing.”