Five housing policies are described below, based on examples of measures that have been introduced or proposed in the UK, in response to a chronic shortage of affordable houses in many regions.

using the ‘demand-and-supply’ model, the likely impact of each policy on the equilibrium quantity and price of houses, and how this might affect the UK’s affordable housing shortage.

Policy 1
Advice is given to the government to allocate more land for housing development, simplify procedures for planning permission, take more account of local housing need in deciding on planning applications, and make regulation on land use more effective through giving more freedom for housebuilders to choose the sites to develop.

Policy 2
Landowners will have to pay a tax for plots of building land for which building permission has been granted but no work has been carried out and the plot remains empty. This is to avoid “land banking” – keeping land undeveloped until it acquires more value due to manufactured shortage.

Policy 3
The UK government ‘Help to Buy: Equity Loan’ is a scheme that allows buyers of newly built homes to reduce the deposit needed to 5% while keeping mortgage to 75% thanks to a loan by the Government of the remaining 20% of the cost. If buyers stay in their home for at least five years they won’t have to pay any loan fee on the government scheme. The government has also increased the limit of equity loan for London properties to 40% to reflect current property prices.

Policy 4
The government has introduced a three-per-cent stamp duty surcharge that property owners are liable to. Some observers have said that this would push amateur buy-to-let landlords out of the market, as they are less well resourced to cope with the tax change compared to corporate developers. Most of the landlords who might be pushed out of the letting market by this measure are wealthy parents investing for their children’s future or those who have inherited properties.

Policy 5
The government has set up a programme of guarantees to support lending to smaller housebuilders by taking on some of the borrowing risk usually borne by developers in their projects

Answer rating: 100% (QA)

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