TALKING POINT
FIVE CREATIVE WAYS TO SOLVE THE UK’S HOUSING SHORTAGE In this article, Jamie Johnson, CEO of FJP Investment, shares with PSBJ five creative opportunities to increase new social housing stock in the UK. severe housing T hecrisisUK’sis one of the biggest challenges the country faces. It is estimated that, to keep up with the UK’s growing population and insatiable demand for property, the sector needs to produce around 340,000 new homes, including 145,000 social homes, each year for a decade – and this is just to meet the backlog and anticipated formation of new households. This problem has been on a rising simmer for a long time. Between March 2019 and April 2020, the housing stock increased by just 244,000, well short of the target of keeping pace with demand. Further, only 57,644 affordable builds were completed – of these, only 6566 were social housing. Indeed, the days of council-instructed social housing construction booms are
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well behind us, despite what would appear a pressing need to ensure the availability of more social and affordable housing. Particularly influential on this shortfall is Margaret Thatcher’s 1980 Housing Act, which introduced right to buy, resulting in the removal of a large portion of the UK’s existing social housing stock, with little state priority gifted to replacing them. By the 2000s, only 208,000 social homes were built across the entire decade, with housing association builds making up the vast majority. Of these, councils themselves built just 4000. The perception remains that affordable and social housing should be a priority of the Government, which has the ultimate responsibility to citizens, taxpayers or voters –
however you choose to look at things – to ensure there is an adequate housing stock. However, the private sector can play a key role in driving up house-building activity, particularly in the wake of the pandemic, which should not go unnoticed.
Build more houses If only we had thought of this sooner! In all seriousness, with the private sector leading on property development, and only a 1% uptick in build completions between 2018 and 2020, there is clearly insufficient incentive for developers and those financing them to build masses of housing stock. Much of the reason for this is to protect the current record house price levels in the UK.
Jamie Johnson is the CEO of FJP Investment, an introducer of UK and overseas property-based investments to a global audience of high net-worth and sophisticated investors, institutions as well as family offices
The consistent incremental growth of house prices marks out UK property as a ‘safe haven’ asset. Were the market to suddenly flood with new properties, a potential consequence would be price instability. In plain, by cooling the market, the housing shortage often works to the benefit of those with the resources to solve it. Accordingly, the Government should extend tax relief and grant schemes to developers that are willing to commit to building large numbers of new properties in areas of particular need. Ideally, this would lift the economic barriers which prevent developers from making scale building projects a cornerstone of their longterm planning.
