How do you solve the housing crisis in a single Budget?
You can’t, of course – not with Brexit looming and a Prime Minister demanding that you both signal the end of austerity and reduce the UK’s national debt at the same time. But housing policy is the one single issue that personally and radically affects more people’s lives than any other, and as such, matters far more than the cash giveaways for potholes and public lavatories that the chancellor announced on Monday.
There is no silver bullet. An integrated strategy is required that includes some combination of reforming financing laws, relaxing planning regulations, changing tax incentives, improving the rental market, and ultimately building more homes so that supply is better able to keep pace with demand.
But that said, this week Philip Hammond did take some positive steps in the direction of making home-ownership a more attainable dream.
On the financing side, the decision to abolish stamp duty for first-time buyers of shared ownership homes is a good start. True, like the extension of the Help-to-Buy scheme by two years, it is a demand-side reform that will not fix the underlying shortage, but it does give young people an increased chance of making it onto the first rung of the property ladder.
And there will be more building too. In particular, Hammond’s additional £500m for local councils should, combined with Theresa May’s party conference pledge to abolish the cap on council borrowing, help developments get underway, as will the £1bn earmarked to help SME builders compete with larger firms.
The question, then, is where those homes will be built. And here the answer is interesting.
Hammond did not mention more developments on the green belt or on other protected land. But he did fuse housing policy with the challenges facing Britain’s floundering high streets, by announcing a £675m fund to help councils convert commercial space into housing.
If you think about it, it is surprising that this has taken so long. The changing role of the high street in British life is well-documented, as people increasingly shop online. Shops are struggling, and retail space is being left empty, even as residents in the area battle for housing.
By acknowledging that, while a building may be set in stone, its designation as a commercial space is not, the chancellor has unlocked the potential for up to 400,000 new homes.
This may not be the radical overhaul that many hoped for, but it is a start, and for that the chancellor should be commended.