220,000 New homes a Year are Needed to Prevent an Escalation in the crisis

08 May 2007 - Source: www.politics.guardian.co.uk

The housing minister, Yvette Cooper, a close ally of the chancellor, has warned that unless more homes are built, 70% of 30-year-old couples buying for the first time will not be able to afford a home.

The issue is being discussed by ministers in the Treasury spending review, but Ms Cooper has repeatedly warned that demand for houses is outstripping supply around the country. Housing has recently been identified by at least three Labour deputy leadership candidates - Jon Cruddas, Hazel Blears and Alan Johnson - as a badly neglected issue.

The Treasury is looking at a range of measures to increase house construction, speed up planning applications, release land and ease access to ownership through shared equity schemes. Some of the measures will allow councils to retain more rent revenue with which to build new homes, the first easing of restrictions on councils for years.

The government has also appointed John Calcutt, a former chairman of English Partnerships, to lead a housing review.

The pressure has been intensified by figures suggesting that the demand for housing is rising rapidly, due to the increase in the number of people living alone.

A government review suggested that 220,000 new homes a year are needed to prevent an escalation in the crisis, well above the levels of the current housebuilding programme. Partly by speeding the process of planning applications, the number of homes in construction has risen from 130,000 to 180,000, which is still insufficient to meet the demand anticipated by the review.

Latest projections show that the number of households in England will grow by 209,000 a year up to 2026, with 72% of these being single-person households. The average number of people in a household will fall from around 2.3 to 2.1 during the next two decades.

The government is also considering encouraging extra private investment in shared ownership schemes, and further relaxations in planning rules.

Ministers faced by spiralling land prices are also looking at extending social homebuy pilot schemes, so tenants only need a minimum 10% stake, instead of the current 25%. The chancellor is still opposed to freeing councils to borrow money to build council homes.

He is under pressure from within his own ranks to drop one of his initiatives, the planning gain supplement (PGS), a tax to be paid by developers based on the rise in land value after planning permission is granted. Critics claim the PGS will act as a brake on the release of land and lead to further house price increases.

 

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