The last two decades have seen UK house prices spiral out of control. Many of us are being priced out of the market, as wages lag behind the speed at which house prices are rising across the UK.

We’re often told that building more homes will fix the problem, but the current affordability crisis is actually being driven by a combination of factors that no one is talking enough about: excessive bank lending against property, rising land prices, the preferential tax treatment that’s tied up with owning a home, and government subsidies for mortgage debt.

The recent growth in mortgage lending worrying the Bank of England is not down to a surge in first time buyers, but the result of more people becoming buy-to-let landlords. What’s more, it’s serving to inflate house prices further – creating a self-fulfilling cycle of even larger loans required to cover spiralling house prices, relative to incomes.

In many places now the cost of housing is out of control – not just in terms of buying a house, but paying high rents to landlords with the genuinely affordable rents of social housing becoming a thing of the past.

But in one of the wealthiest countries, the idea that we should all have somewhere warm and dry to call home shouldn’t be out of the question.

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Image credit: pixelhut via Flickr

The way our housing market is currently functioning is not sustainable, but it’s also not inevitable.

So how can we make housing affordable again?

NEF is working with campaigners, researchers and policy-makers to develop proposals that will stabilise house prices and ensure we have sufficient good-quality homes for the emerging needs of the population. We will focus on the following four areas:

  1. Deterring property and land speculation
  • Develop mechanisms to separate the cost of land from that of a home and bring more land into public and communal ownership. NEF is working on a proposal for this and will be inviting feedback over the coming months.
  1. Achieving a diversity of housing supply and improving options for debt-free homes across the UK
  • Remove government subsidies directed at boosting homeownership and reinstate the commitment to provide public housing, allowing for genuinely affordable social rents
  • Support the growth of low-debt ownership such as cooperative housing schemes and community land trusts through prioritising not-for-profit housing developments on available land
  1. Demanding a more secure and affordable private rented sector
  • Support tenants in their demands to professionalise the private rented sector, increasing the length and security of tenures
  • Set rent according to people’s incomes
  1. Diversifying the banking sector so it builds the economy, not bubbles
  • Impose limits on the amount of debt that banks can hold that against property
  • Establish public and local stakeholder banks across the country focussed on lending to small and medium sized businesses