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UK changes tack with help for renters, not just homebuyers

By Costas Pitas | LONDON

LONDON Britain set out plans on Tuesday to make renting more affordable, protect tenants and punish developers for not building quickly enough, in a shift away from decades of policy almost solely promoting home ownership.

In a white paper entitled “Fixing our broken housing market”, the government laid out proposals to build more homes for rent, extend the length of tenancies and change planning laws to encourage developers to boost supply for renters.

Amid signs that housebuilding will not meet demand for many years to come, it also said local councils may be given power to rescind planning permission or even take control of land from developers who fail to build quickly enough once it is granted.

Since then-Prime Minister Margaret Thatcher began selling off council homes in the 1980s, very little social housing has been built, with successive governments instead seeking to help those trying to get a foot on the property ladder.

As a consequence, demand has outstripped supply in many areas of the country, pushing up the average price of a property to more than eight times average earnings and forcing many people to spend up to half their income on rent.

“We need to look after people who are renting as well (as buyers) and in the past I think many governments have focused too much just on ownership,” communities minister Sajid Javid told Sky News.

A previously announced 7 billion pound programme to build 225,000 properties by 2021 was originally limited to those wishing to buy at least a share of the home, but will now be opened up to tenants.

The measures, including support for smaller developers, are designed to increase the number of new homes coming onto the market in England from 190,000 units a year to at least 250,000, after decades of falling short.

Despite years of bipartisan efforts to increase supply, there are signs that housebuilding could stall.

Britain’s biggest housebuilder Barratt (BDEV.L) said last month it might build fewer homes in the current financial year and flagged a drop in completions of over 50 percent in London, which it blamed on build cycles and land prices.

A closely watched leading indicator of future housing supply fell nationwide by 2 percent in 2016 and by a third in London, according to industry data.

Builders are also concerned that any Brexit-imposed restrictions on immigration could affect their ability to meet demand, especially in the capital where a high proportion of construction workers come from the European Union.

“It’s all about having sufficient trades, sub-contractors and suppliers to produce this increased output and that’s probably the biggest constraint to the sector,” Ted Ayres, the chief executive of builder Bellway (BWY.L), told Reuters.

“I suspect that we may well need further overseas labour if we are going to achieve the output the government desire.”

(Editing by Catherine Evans)

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