End the war against housing and landlords

My grandfather, living in a modest two-up two-down house in Manchester, used to recount the pride he felt when he watched the rent collector skip his gate every week after he managed to buy the family home: he was now a homeowner. His dream has been central to my party's promise for most of its modern history: the ultimate evidence that, in Conservative Britain, hard work pays off and responsibility is rewarded.

When we assumed office from Labour in 2010, housebuilding had plummeted to its lowest peacetime level since the 1920s and the number of first-time buyers had collapsed to levels not seen since the 1970s. Moderate reform of outdated planning rules dragged supply up, peaking at almost a quarter of a million additional properties in 2019-20 when I was housing secretary - the highest number since 1987.

But that was both not nearly enough and to prove a high watermark. Only around a quarter of a million homes were estimated to have gained planning consent in the 12 months to September 2023, well below the Government's target of delivering 300,000 homes per annum. Serious attempts at planning reform have been abandoned, small landlords have been driven out of the market by aggressive tax treatment, and the industry has faced the economic headwinds of inflation and rising interest rates. This chokehold on supply is bad for homeownership, bad for renters and bad for economic growth.

The medium-term answer is to build, build, build. That means a return to planning reforms that support small builders to prosper by freeing them from red tape and overbearing environmental regulations. We should expand the number of new towns planned using development corporations and through powers already in the hands of ministers.

We should pursue urban densification and regeneration by driving up housing targets in our biggest cities, as I did as housing secretary, and creating more inspired developments like King's Cross. And as long as we have a plan-based system, we must simplify and enforce local plans, as many local authorities have stopped altogether and only 40 per cent met their housing targets in the past three years.

Equally, we will only bring the housing crisis under control when we confront the flip side of the coin and end our disastrous experiment with mass migration. For too long, the pro-housebuilding "yimby" movement has ignored the fact that the housing crisis is also inextricably tied to unprecedented levels of legal immigration. If the package I secured to reduce legal migration by 300,000 was followed with further reforms I advocate for, we could significantly alleviate demand on housing, particularly in our major cities where immigrants tend to cluster.

But with only one more Budget this Parliament, what can the Government do next month?

Firstly, we should cut stamp duty by increasing the thresholds, lowering rates or scrapping it altogether if headroom allows. Stamp duty is a terrible tax. It exacerbates the housing crisis because it leaves people in the wrong houses: it's an obstacle to younger people moving to take highly productive jobs and it hinders the more than a quarter of homeowners, particularly pensioners, who want to downsize. The duty distorts prices across the whole ecosystem, so it's also renters who suffer.

The last temporary stamp duty reduction, which the Prime Minister and I implemented when we were chancellor and housing secretary, served as a major economic stimulus, increasing housing starts and boosting sales as well as all the accompanying sectors, from removals to home improvements. Millions of small businesses benefited.

Secondly, encourage a new market for 25- or 30-year mortgages. Longdated mortgages, effectively government-backed in the US, aren't subject to the same short-term pressures as a market that is indexed to either variable rates or shorter-term fixed rates. This would give consumers more certainty and make it easier for the Bank of England to do what is best for the economy as a whole, like the US Federal Reserve has been able to do.

And thirdly, we should end the war on small landlords, which has proven to be so counter-productive for renters. It's time to bring back mortgage interest relief for smaller landlords ,which was removed to choke off the buy-to-let boom of yesteryear. It certainly achieved that purpose, but at the expense of thousands of small property investors. The market has lost so many landlords that there are not enough properties available for renters, especially outside the big cities where institutional landlords might reasonably be expected to step in. No single policy will solve the housing crisis and ones that increase demand alone certainly do not. But the immediate steps I propose today can begin to turn a corner on the war against housing and landlords and give aspiration and economic growth a fighting chance.