Your browser is no longer supported

For the best possible experience using our website we recommend you upgrade to a newer version or another browser.

Your browser appears to have cookies disabled. For the best experience of this website, please enable cookies in your browser

We'll assume we have your consent to use cookies, for example so you won't need to log in each time you visit our site.
Learn more

BUDGET: IMPROVING HOUSING SUPPLY AND SIMPLIFYING PLANNING

  • Comment
Budget 2003 announces three substantial new housing-related reviews ...
Budget 2003 announces three substantial new housing-related reviews

to help improve both housing supply and mortgage finance in the UK.

Building on the reforms already announced to deliver a step change in

planning policy, further significant changes in the planning, supply

and finance of housing will be required to address both demand and

supply in the housing market to tackle market failures, significantly

increase the responsiveness of supply to demand, and reduce national

and regional price volatility. This includes requiring new Regional

Spatial Strategies to take account of volatility in the housing

market and promote macro-economic stability as part of delivering

sustainable development; tough and credible measures, including

intervention, where local authorities are not delivering housing

numbers in high demand areas; and exploring whether, in the medium

term, achieving government objectives will require a system of

binding local plans.

Kate Barker will review issues underlying the lack of supply and

responsiveness of housing in the UK, and David Miles will

review the factors underlying the low take-up of fixed rate mortgages

in the UK. The deputy prime minister is also asking John Egan to

develop a skills and training strategy for economic development,

regeneration and planning.

Reviewing housing supply in the UK

The poor responsiveness of new housing supply to rising house prices

is a complex problem. In the light of its reforms to the planning

system, the government has asked Kate Barker, formerly of the CBI and

now a member of the Bank of England's monetary policy committee, to

conduct a review of issues affecting supply of housing in the UK, in

particular:

- the role of competition, capacity and finance of the house-building

industry

- the interaction of these factors with the planning system and

sustainable development objectives

- if appropriate, identify options for gov ernment action, including

the use of fiscal instruments

This review will complement the work of the Sustainable Home

Ownership Taskforce announced by the deputy prime minister on 18

March.

Reviewing the UK fixed rate mortgage market

The proportion of fixed - as opposed to variable - rate mortgages is

markedly low in the UK in comparison with many European countries and

the USA. This is one reason for the greater sensitivity of UK

household finances to interest rates compared with that in many other

countries. The chancellor has asked David Miles to

undertake a review of the factors underlying the low take-up of fixed

rate mortgages in the UK. The review will:

- establish why the share of fixed-rate mortgages in the UK is low

compared with the US and many other EU countries

- examine whether there has been any market failure that has held

back the market for fixed and long-term fixed-rate mortgages

Development, regeneration and planning

Too often the planning system is seen as reactive and regulatory,

rather than as a positive tool for change. To promote culture change

in the planning regime, the deputy prime minister has invited Sir

John Egan to develop a skills and training strategy for economic

development, regeneration and planning to deliver sustainable

communities, building on the efforts of the Royal Town Planning

Institute to examine its own structure and the educational

requirements leading to a planning qualification.

DETAILS

Further details of these reviews and the reforms to housing supply

and planning are set out in Chapters two and three of the Budget

document. Their terms of reference are set out below.

Housing supply review - Terms of reference

- Conduct a review of issues underlying the lack of supply and

responsiveness of housing in the UK

- In particular to consider:

- the role of competition, capacity, technology and finance of the

ho use-building industry; and

- the interaction of these factors with the planning system and the

Government's sustainable development objectives.

- Consult with key stakeholders to establish views and inform

analysis.

- If appropriate, identify options for Government action, including

the use of fiscal instruments.

- Deliver an interim report to the Chancellor and Deputy Prime

Minister by autumn 2003.

UK fixed rate mortgage market review - Terms of reference

- Undertake analysis of supply and demand side factors limiting the

development of the fixed rate mortgage market in the UK to

establish why the share of fixed-rate mortgages is so low compared

to the United States and many other EU countries;

- Consult with key stakeholders to establish views and inform

analysis.

- Examine whether there has been any market failure that has held

back the market for fixed and long-term fixed rate mortgages and

consider associated opportunities, risks and potential costs.

- Deliver an interim report by autumn 2003 and a comprehensive report

and recommendations to the Chancellor by Budget 2004.

Details of Sir John Egan's review will be made available from the

ODPM.

NOTES

Professor Miles will chair the review of the UK fixed rate

mortgage market. He is professor of financial economics at Imperial

College, University of London and has long specialised in the

economics of financial markets, pensions and housing.

Kate Barker will chair the review of housing supply in the UK. She

has been an external member of the Bank of England's monetary policy

committee since June 2001 and was previously chief economic advisor

at the CBI.

  • Comment

Have your say

You must sign in to make a comment

Please remember that the submission of any material is governed by our Terms and Conditions and by submitting material you confirm your agreement to these Terms and Conditions.

Links may be included in your comments but HTML is not permitted.