The UK’s housing market has a lack of affordable and suitable homes and strong action is needed to support first-time buyers, renters and people looking to downsize, a body representing members of the banking and finance industry has urged.
UK Finance said the scale of the challenges means strong action is needed from the public and private sectors.
Its report said: “The UK housing market is grappling with a shortage of affordable, secure and suitable homes for people at different life stages.”
UK Finance added: “We believe that well‑considered policies, backed by evidence whilst acting on lessons learned from the past, could address the challenges the housing sector faces.”
Its report said: “In England, the long‑term failure to meet the previous government’s goal of building 300,000 new homes a year is often cited as the key policy issue.
“As a result of repeatedly missing targets, the UK has an estimated shortfall of 4.3 million homes, a number that is growing every year.”
The body, which represents over 300 firms including 120 mortgage lenders, said the new Government had acted quickly to encourage more housebuilding and ensure affordable housing is a key part of its new targets.
But it suggested further measures, including calling for the temporary nil-rate band for first-time buyers on stamp duty up to £425,000 to be made permanent.
The nil-rate threshold for first-time buyers was temporarily increased from £300,000 to £425,000 in 2022 and it applies to purchases made up to March 31 2025.
Stamp duty applies in England and Northern Ireland, with Scotland and Wales having other property taxes.
UK Finance also suggested there should be a review into whether prudential rules introduced after the global financial crisis have made getting a mortgage too tough.
To support the ageing population, last-time buyers should be helped through an independent advice service for older homeowners, UK Finance said.
It also suggested minimising up-front costs for those choosing to downsize, such as through a stamp duty exemption.
Government housing targets should also include homes suitable for older buyers in places they want to live, it added, and called for further support for the rental market by reviewing the Local Housing Allowance annually so it keeps pace with rents.
A Government-sponsored registration system should also be created for owners of rental properties to ease the compliance burden on landlords and
help local authorities, mortgage lenders and tenants identify rogue landlords or sub-standard properties, the report said.
UK Finance also suggested tax incentives to encourage landlords to make green upgrades to their properties.
Charles Roe, director of mortgages at UK Finance, said: “Everyone needs a safe, secure and affordable home, so we welcome the Government moving quickly to reduce the UK’s housing shortfall and get more people on to the housing ladder.
“However, the size of the challenge means we need strong action, from both the public and private sectors, right across the UK’s housing market.
“Our new report sets out a range of recommendations to complement the Government’s plans.
“These include making the planning process simpler, removing some of the barriers first-time buyers face and ensuring we’re meeting the housing needs of our ageing population.
“Improving standards in the private rental sector and supporting the social and affordable rental sectors will also be key.”
A Ministry of Housing, Communities and Local Government spokesperson said: “We are facing the most acute housing crisis in living memory, and in a matter of months this Government has already taken action by announcing the most ambitious overhaul to the planning system yet.
“We will go further by introducing a Planning and Infrastructure Bill to accelerate delivery and ensure we get Britain building again. And we will continue to work in partnership with councils to deliver 1.5 million homes.”
