David Hannah, Group Chairman of Cornerstone Tax, discusses the need to develop new houses.
The Queen’s Speech announced that neighbours will be allowed to cast votes on the style and size of extensions on their street that impact new homes, conversions and renovations. By introducing this, ministers hope homeowners will facilitate for greater property development by allowing them to increase the value of their home.
David Hannah, Group Chairman at Cornerstone Tax:
“The problem we have in the property market is the rate of demand and supply – it has pushed house prices to record numbers. If builders are building and they’re over supplying, it will soften the increase and the appreciation in asset value. But, if the number of people wanting to buy houses continue to exceed the supply, then those prices are going to continue rise.”
This announcement comes as the property market is shrouded in uncertainty over the long-term future as young people are being priced out of buying their own homes. With the average asking price in the UK surging to £360,101 – representing a £19,082 increase over the past three months – 53% of properties are selling at or over their final advertised asking price.
These persistent rises have made it harder than ever to get onto the property ladder, with buyer inquiries 65% above the levels seen in 2019. The levelling-up secretary, Michael Gove, said he wants to target the astronomical profits of developers by encouraging residents to agree to local development through financial and aesthetic inducements. Analysis by the Mail shows that eight house developers in the FTSE100 and 250 are on course to have accrued more than £7billion in profits across 2020 and 2021.
David Hannah, Group Chairman at Cornerstone Tax:
“The announcement at the Queen’s Speech is intended to encourage homeowners to make more intensive developments to their properties by allowing them to increase the value of their property. I think the government are searching for ideas to increase the number of new houses being built in the UK as their current figures seem to be significantly lower than their targets.”
While the government has set a target of 300,000 new homes a year in order to level the currently unbalanced supply and demand level in the UK, they seem to be falling short of this target with their recent figure of 250,000 being described as an exaggeration.
Robert Jenrick, the former Secretary of State for Housing highlighted the importance of building more homes for the UK but stated that successive governments have failed to do this, always citing an excuse. The need for new homes in the housing market is evident, but it is now unclear if the announcement made at the Queen’s Speech will aid in achieving the government’s targeted yearly number of new houses.
David Hannah, Group Chairman at Cornerstone Tax:
“We have an open market in the UK which means not only are domestic purchasers and investors looking to buy but we have inbound investors. We also have quite a number of people relocating to the UK. Overall, I expect demand for UK housing to continue to outstrip supply – pushing price increases ahead of inflation and provided wages are increased, the affordability of housing will stay in lockstep.”
