Institutional investment in the housing market that finances additional supply is welcome and needed. Without such investment, activity in the housing market would be much reduced and would increase the significant pressure already facing renters and prospective home-owners. That said, institutional investment must not displace home-buyers in traditional estates where demand and viability is not an issue, and the pathway to ownership for first-time buyers must be protected.
The Government has already taken action, through taxation and planning measures, to protect traditional family homes from bulk purchases while maintaining investment where it is needed.
A higher stamp duty rate of 10% now applies to multiple purchases of 10 or more houses within a 12-month period, on a cumulative basis, regardless of location. Apartment buildings, multiple purchases by local authorities and Approved Housing Bodies, and mortgage to rent by private sector participants, are excluded from this higher stamp duty.
Ministerial planning guidelines have also issued to local authorities to help address the regulation of commercial institutional investment in certain housing developments and ensure new 'own-door' houses are not bulk purchased by institutional investors in a way that displaces individual purchasers.
The guidelines set out two planning conditions. In the first instance, to ensure an adequate choice and supply of housing, they restrict new houses and duplexes to first occupation and use by individual purchasers and those eligible for social and affordable housing, including cost rental. Secondly, they require developers of five units or more to enter an agreement with the relevant local authority to limit sales of such units to individual purchasers.
These steps complement other measures in Housing for All which seek to increase the supply of affordable homes, including delivering affordable homes on local authority lands; introducing Cost Rental tenures and a First Home shared equity scheme; and, expanding the Part V planning requirements to increase the contribution required from 10% to 20%, and applying it to cost rental as well as social and affordable housing.
This multi-faceted approach to housing delivery will help significantly increase supply, key to meeting demand and addressing inflationary pressures, and improve affordability for families and individuals wishing to secure a home.
