YBS: Councils should be able to borrow against existing properties

Ryan Bembridge

March 9, 2017

Councils should be able to borrow against existing properties to increase housebuilding at a local level, Yorkshire Building Society chief economist Andrew McPhillips has urged.

Like many property professions he was lukewarm about both yesterday’s Budget and the Housing White Paper, as he reckoned neither will help tackle the UK housing crisis.

McPhillips (pictured) said: “Building the number of homes required will rely on more powers and resources for Metro mayors and councils.

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“All councils should be given greater freedoms to manage their own budgets and borrow against existing properties to build homes.

“Schemes in Manchester and Wakefield, where local authorities have invested in house-building programmes with the aim of alleviating local housing shortages could be replicated across the country to ensure that each area’s specific housing needs are met.

“Whatever form it takes, devolution of current national Homes and Communities Agency grant programmes and extended borrowing powers for councils are essential to making sure housing supply is delivered on, not just promised.”

McPhillips saw yesterday’s Budget as a ‘missed opportunity’ as he was also hoping stamp duty would be made a sellers tax.

He added: “There remains real doubt that measures included in the Budget and recent Housing White Paper will help to tackle the growing housing crisis in the UK.

“The Budget was a missed opportunity to help tens of thousands of first-time buyers and families who have out-grown their homes by making stamp duty a seller’s tax, rather than a buyer’s tax.

“In today’s housing market, stamp duty in its present form is simply not fit-for-purpose. Stamp duty causes blockages at all levels in the housing market by disproportionately disadvantaging those with growing families who need to move up the property ladder.

“It adds to the burden of upfront costs for those looking to get on to the housing ladder, particularly in London where our average first-time buyer pays £13,000 in stamp duty alone.

“However, while reforming stamp duty addresses the symptoms of the UK’s housing crisis, as a stand-alone measure it will not solve the root cause which is lack of supply.”

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