Labour MP Ed Balls is calling for radical changes in the housing market to make ownership affordable for first time buyers. The shadow chancellor spoke out at the annual Labour Party Conference in Manchester last week with fresh calls for 100,000 new affordable homes and a two-year stamp duty holiday.
Mr Balls believes that the £3bn to £4bn funding for this much-needed buyer relief will come from the sale of the 4G mobile spectrum.
Speaking at the conference, Mr Balls said he wants to offer a two-year stamp duty holiday for purchases below £250,000 in value and promised 100,000 affordable homes. Like a number of things that politicians say when their party wants to win the next election – it’s all a little too good to be true. It’s currently unclear how Mr Balls plans on delivering thousands of homes to the nation and stumping up the cash for the stamp duty holiday apart from the 4G mobile sale.
One thing which Mr Balls is right about is the fact that action needs to be taken sooner rather than later as the MP stressed affordable housing is an ‘urgent’ concern.
“With this one-off windfall from the sale of the 4G spectrum, let’s cut through the dither and rhetoric and actually do something,” he said. “Not more talk, but action right now.”
He added: “Let’s commit that money from the 4G sale and build over the next two years: 100,000 new homes – affordable homes to rent and to buy – creating hundreds of thousands of jobs and getting the construction industry moving again.
“Add to that a stamp duty holiday for first-time buyers, and we can deliver real help for people aspiring to get on the property ladder.”
The sale of the 4G radio frequencies to support future mobile services will allow users to download data such as videos and music at a much faster speed. The auction could raise between £3bn and £4bn according to the National Endowment for Science, Technology and Arts (Nesta). According to Mr Balls, a cash injection into the housing market could significantly help buyers.
A grey cloud of economic woe has been hanging over the UK housing market ever since the global financial crisis in 2007. Sales volumes are down 38% since the peak five years ago and homelessness, overcrowding and shockingly high rents have all increased in the same period.
Rent prices are at an all-time high as more and more people are being forced to remain in the private rental sector for longer. This is the end result of greedy banks burning up all the cash that was previously used to supply mortgages and now being too strict to lend to anyone without demanding almost unattainable deposits.
London is the one spot in the country which bucks the falling house price trend with property prices continuing to rise. As a result it takes the average worker 51 months to save for a deposit as opposed to the national average of 37 months. The aspiration of homeownership in the city is a dream for many who are already struggling keep up with the average monthly rent of £1,074.
The LSL Property Service monthly survey shows that rental prices rose for the fifth consecutive month in August, reaching a new high of £734 per month.
David Newnes, director of LSL Property Services said, “London and the South East may be the powerhouses of the national rental market, but rent rises haven’t been limited to these areas by any means. In fact, rents have hit record highs in five regions as tight mortgage finance criteria and large deposit requirements for new buyers continue to ramp up the pressure on the limited stock of rental homes available.”
It’s not just rental prices that are increasing but homelessness figures are rapidly rising as well. The bi-annual housing report from Shelter found that there has been a large increase in homeless acceptances and rough sleepers.
The number of homelessness acceptances, where a household is defined as unintentionally homeless and eligible for support, increased by a massive 27% in the final quarter of 2011 compared to the period when the coalition came into power.