An influential property trade body is recommending that the Mayor and borough councils should be able to exempt any social housing that they build from the Tory Government’s cherished right-to-buy policy, in an effort to stem the house price inflation which is causing a form of social cleansing in many parts of London.
RICS, the Royal Institution for Chartered Surveyors, in its latest monthly report on market trends, says that the number of homes coming on to the market across the country was insufficient to meet a rush in demand from landlords aiming to beat April’s introduction of a 3 per cent hike in stamp duty on buy-to-let purchases.
New buyer enquiries rose for the 10th month in a row in January, accelerating for a second successive month, the RICS survey found, as buy-to-let investors – many from overseas – are moving in to complete purchases before the extra stamp duty on second home purchases kicks in.
Speculative developers pushing up tower blocks or converting offices into “luxury apartments” around Croydon must be rubbing their hands together at the seemingly unceasing demand for their over-priced properties.
The capital’s rampant house price inflation has managed to exclude many young Londoners from being able to buy their own homes in their own neighbourhoods. Those in public service occupations, including teachers and nurses, find sky-high mortgages unobtainable for homes close to their place of work, making recruiting staff for hospitals and schools a growing problem.
RICS recommends that in London, the Mayor and local councils should take on the role of developers to meet the ever-rising demand for housing, and that newly developed social homes should not be subject to right-to-buy, with the possibility of subsequent re-sale on the open market – often to buy-to-let “investors”, and usually at a vast profit.
This recommendation from a trade body not known for being a hot-bed of radical socialism runs counter to the Tory Government’s plans to forcibly sell-off housing association properties, a policy enthusiastically supported by Croydon Conservative MPs Gavin Barwell and Chris Philp.
And it seems to recognise that, in London and the south-east especially, the Thatcherite shibboleth of right-to-buy, without adequate housing being built to replace social stocks, is at the root cause of the price bubble.
“The Mayor should, in partnership with London boroughs, lobby government to allow the Greater London Authority and councils to act as developers and to support others to build homes,” said Chris Day, the chair of RICS’ London regional board.
“This should be done under an arrangement where new homes are exempt from right-to-buy if social or affordable. And if these are sold at a discount, they should not be resold in the open market at full price but remain within a discounted market aimed at low- and middle-income groups. This partly fits with new government ambitions around direct commissioning.”
In the meantime, paying for a home – whether to buy or to rent – is going only one way, according to RICS.
“The near-term pressure on prices is if anything intensifying despite a higher level of supply,” Simon Rubinsohn, RICS’ chief economist, said.
“How the tax changes planned for the buy-to-let sector over the next few years play out remains to be seen but there are concerns raised in the survey that some existing landlords will look to either gradually scale back on their portfolios or exit the market altogether as the more penal regime begins to bite.
“Against this backdrop, it is perhaps not surprising that the key RICS indicators points to further rent – as well as house price – increases.”
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