MPs say that plans to solve housing crisis will fail

The Treasury Select Committee has said that government plans to tackle the housing crisis, including abolishing stamp duty on homes under £300,000, will fail without further reforms.

Stamp duty was a key part of Chancellor Philip Hammond's November Budget but, despite suggesting that it has already helped over 16,000 people get onto the property ladder, the Treasury Select Committee has warned that the move is more likely to push house prices by at least the amount the reduction in stamp duty is supposed to save.

Furthermore, it claims that the government will only meet his target of 300,000 new homes a year if he takes further action to promote building such as lifting a borrowing cap on councils.

The committee's report states: "Greater measures are needed to increase housing supply. 300,000 homes a year will not be achieved with the current measures. The government will need to show greater commitment to housing supply to achieve its aspiration and will need to bring forward additional policy measures."

Lord Porter, chairman of the Local Government Association, said of the report: “It is great that the influential Treasury Select Committee has backed our call for councils to be given the freedom to borrow to build more of the new homes our communities desperately need. This is significant recognition of our central argument about the vital role councils must play in solving our housing shortage.

“When giving evidence to the committee last year, we were clear that if we are to truly get back to building 300,000 homes a year, then all areas of the country need to be able borrow to invest so that they can resume their role as major builders of affordable homes. We now urge the Treasury to act on the committee’s recommendation and use the upcoming final Local Government Finance Settlement to completely scrap the cap on the amount councils can borrow to build. It also needs to allow councils to be able to keep 100 per cent of receipts from properties sold through Right to Buy to replace homes and reinvest in new housing.”