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The housing market needs urgent reform in order to avoid the boom and bust cycles that have plagued it for the last 40 years.
 
The call, about as familiar as cuckoos in spring, has this time come from the respected Joseph Rowntree Foundation.
 
Its new report, Housing Market Taskforce, calls for housing supply to be boosted, in order to limit volatility; caps to be placed on mortgage lending; reforms to stamp duty; council tax to be replaced by a national property tax; and developing other alternatives to home ownership.
 
The report warns that action is needed now, in order to stop another boom/bust cycle taking hold.
 
Among its most controversial suggestions is a further clampdown on lending, with the provision of an ‘effective’ safety net. It suggests that this could be a ‘partnership insurance’ where borrowers, lenders and the Government all chip in the premiums.
 
The report admits that curtailing mortgage credit would be controversial, but says that credit controls such as restricting maximum loan to value ratios would have an effective direct impact on the housing market and reduce volatility.
 
It also calls for a reform of stamp duty, so that higher rates are only applied once thresholds have been passed on the ‘extra’, and not on the entire value of the property.
 
It suggests that council tax should be replaced by a new national property tax, where the Treasury’s take would rise and fall with property values. It admits that such a reform would be controversial.
 
The report also criticises what it sees as shortfalls in the private rented sector, saying it does not offer enough security for many families.
 
The report discusses the idea of rent controls, but admits that these would deter landlords from entering or staying in the sector. The report concludes that low-cost (ie, subsidised)  home ownership and social rented housing are both viable solutions.
 
The report warns repeatedly of the need for prompt action: “Over the coming year, there is likely to be an increased focus on the depressed nature of the housing market, while unemployment may further expose the weaknesses in the current home-owner safety net.
 
“Yet it would be a profound mistake to leave the underlying volatility of the housing market unaddressed. We know from past experience that, without fundamental reform, the cycle of boom and bust will reassert itself.”

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