So far, the big question in the Conservative Party leadership campaign has been how to handle Brexit. But there’s another issue that could be even more important, both for the country and for the Conservative Party’s continued existence, and scarcely anyone is talking about it. That issue is housing.
The price of property in many parts of the UK makes it hard for young people, even with good jobs, to own their own home. This is a tragedy on many levels:
- A whole generation is paying through the nose for substandard housing, and seeing their aspirations to afford their own home thwarted.
- It makes it harder for young people to start a family: between 1996 and 2014, 157,000 fewer children were born in the UK because of the cost of housing.
- It hurts our economy, by making it harder for people to move to take up new jobs, and for employers to hire skilled workers.
What’s more, the housing crisis is political poison for Conservatives. The Conservative governments of the last century all had a strong offers to the British people on housing: Baldwin launched the ‘Metroboom’ which saw more than 350,000 houses built a year; Macmillan made his reputation rehousing Britain after the war; Thatcher introduced Right-To-Buy, turning a new generation of council tenants into homeowners.
Home ownership has long been a central part of the Conservative message of aspiration and prosperity. A generation that can’t hope to afford home ownership will be a generation ready to listen to Labour’s messages rather than ours. If we can’t provide a compelling answer to the question of housing, the Conservatives will fail the country and condemn ourselves to political irrelevance.
The way to fix this problem is to take radical action that will get many more houses built. We need to do this while preserving our Green Belts, protecting the country from ugly, unliveable overdevelopment, and without a government spending splurge that the country can ill afford.
My plan has four parts, which together would add up to a housing revolution, delivering millions of new homes and creating many a generation of new homeowners, without significant public spending.
1. Giving streets power over development
Places like London, where housing is especially costly, are far less dense than many other cities around the world. This is due to red tape, which puts councils, not local residents, in control over who can build what and where. I would give individual streets the power to densify and build upwards if their residents want to, up to a limit of six storeys.
If we make it easier to build upwards and between properties, we can add many more houses where they’re needed most. This isn’t about building 1960s-style high rises: just adding one or two more storeys to make more of our big cities like Pimlico, Kensington or Islington would do the trick.
This will be a massive incentive to build more in our cities, while maintaining their character. It also puts local people, not town halls, in control of development. Not every street will choose to take advantage of the new rights, but some will. I believe it could get more than one million houses built in the next five years around the country, without a penny of additional public spending. And for streets that choose to do it, it will provide a welcome financial windfall for homeowners.
2. Make big infrastructure projects self-financing through housing development
New homes will need new infrastructure, which costs money. But, by using our existing infrastructure budget more wisely, we can free up resources and at the same time get more housing built where it’s most needed.
In countries like Hong Kong and Japan, with some of the best rail infrastructure in the world, the builders of rail lines co-fund their projects by building and selling housing along the line. We could do this in the UK if we changed our planning rules.
This would have two effects. First of all, big transport projects such as Crossrail 2 would create more housing directly. Secondly, the projects would be much less expensive to the taxpayer, which would free up funding to provide infrastructure elsewhere.
3. Introduce a Flexible Right to Buy
The Right to Buy introduced by Mrs Thatcher created a generation of homeowners, by allowing council tenants to purchase their own homes from local authorities. We have a chance to create a similar revolution today.
Many council housing tenants in high-cost cities are sitting on a gold mine from which they cannot fully benefit, and more than half of tenants would like to own. Almost 700,000 local authority-owned homes are in areas where median house prices exceed £250,000. More than 200,000 of these are in areas where median house prices exceed £500,000.
I will give social tenants eligible for the Right to Buy a Flexible Right to Buy, entitling them to buy a new home using the value of their Right to Buy discount. The tenant’s previous home would then be sold, funding the discount and raising additional revenue which would go to the local authority. This could see as many as 197,000 tenants benefit, creating £62billion in net revenue for local councils, which I would allow them to use to build new social housing.
4. Aim to scrap Stamp Duty for homes under £1million
As I said earlier this week, Stamp Duty is one of the UK’s dumbest taxes. Not only does it increase the cost of buying a home, but it also discourages people from moving home for work or downsizing after their kids leave home.
I’d reform this bad tax, with a view to phasing out Stamp Duty on homes costing less than £1million. This would in effect eliminate Stamp Duty for 97 per cent of the housing market, providing a boost to homeowners and anyone who aspires to be one.
Taken together, this plan would create a housing revolution, increasing the supply of housing, creating a wave of new homeowners and making housing more affordable. It would do so without sacrificing the Green Belt, our built environment or our public finances. And it would be good for our young people, good for our cities, towns and villages, and good for our economy. If the Conservatives want once again to be the party of housing and of homeownership, we should get on with it.
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