As the new Labour Government takes up office, Policy Exchange’s new report, ‘The UK’s Broken Housing Market: Causes, Consequences, and Cures’, sets out the need for urgent reform to the housing market.

The report authors argue that:

• The highest priority for the new Government must be housing and planning.
• The UK is experiencing a crisis of housing affordability, both in the purchase price of a homes and in the private rental sector. The principal driver is a chronic undersupply of new housing in the face of persistent demand, and the underlying cause of this shortage is a planning system that heavily constrains the availability of developable land.
• Our current planning regime does not merely have adverse effects on the delivery of new housing but chills the entire supply side of the UK economy. Planning reform, the paper contends, is a prerequisite for a more dynamic British economy.
• Dysfunction in the housing market is also having damaging consequences for the environment, inequality, health outcomes, and popular faith in our economic model: “The affordability crisis in the housing market constitutes the very core of the crisis of confidence in capitalism itself”.

To fix the broken housing market, Policy Exchange sets out 16 recommendations, including: 

1. Scrapping the 1947 Town and Country Planning Act on a limited basis via a Special Development Order. A new, rules based planning system based on zoning should be trialled in cities and their immediate environs.
2. Make hospitals and prisons eligible for the Nationally Significant Infrastructure Projects (NSIP) regime. New National Policy Statements (NPSs) on energy, prison and hospital infrastructure to be published.
3. The Government should complete the review into statutory consultees within the planning system. The NPPF should specify that a proportionate approach be taken when it comes to offsetting the impact of new homes.
4. The Government should reform the ‘Right to Build’ register, requiring that local authorities supply enough serviced plots to meet self-build home applications within two years. Custom and self-build homes to be made a material consideration in the NPPF.
5. The New Homes Bonus should be augmented. For every £1 of new council tax revenue, the government should provide a £3 bonus, with an extra £1 bonus if the new development conforms with an up-to-date local plan.
6. The current system of developer contributions to be replaced with a single, flat rate, locally set infrastructure levy.
7. The Government should reallocate Help to Buy funding over time towards resourcing local planning departments.
8. A new Public Land for Housing Programme should be launched, requiring government departments to transfer land to Homes England for new housing.
9. The country’s green belt designation should be overhauled, with land of genuine environmental value recategorized as Areas of Outstanding Natural Beauty and areas which do not meet this standard zoned as land for permitted development.  
10. Two additional bands should be introduced at the top of the property value scale, and one should be introduced at the bottom and the rates of tax in the top bands should be increased.The single person exemption should also be removed. Some of the increased revenue could be retained by local authorities to fund local services, and a portion of it should be used to finance targeted tax reductions on earned income.
11. A Stamp Duty exemption for last time buyers should be introduced to encourage downsizing. A new tax wrapper should be introduced exempting assets acquired with money released by downsizing from the tax to incentivise efficient use of housing stock.
12. The income tax allowance on the “Rent a Room Scheme” should be increased from £7,500 to £10,000.