RICS residential property proposals

Dealing with the current housing market downturn requires significant and decisive action from the Government whose attempts to address the problems facing the market up to now have been limited and have had little real impact.

To encourage the Government to take action, RICS has put together a package of measures that will help address the downturn in the property market, help people who want to own a home and improve the home buying, selling and renting experience for consumers. These issues will not be resolved by a series of small individual measures but must instead be dealt with by looking at the system as a whole.

RICS believe that a combination of measures must be put in place looking at fiscal and financial issues, new models for home ownership, availability and affordability of homes, consumer information and regulation and standards. The package should not just look at immediate issues but must also establish a more efficient, sustainable property market with more information and better protection for consumers.

It is essential that the Government takes this opportunity to kick start the housing market and at the same time introduce long term reform that will benefit all those involved in property including renters, letters, buyers and sellers.

Fiscal and financial

• Mortgage market liquidity The Government should incentivise the issuance of new mortgage backed securities and covered bonds by allowing investors who buy them to enter into a repurchase arrangement with the Bank of England. This process would use the same repurchase system as the existing Special Liquidity Scheme but would require the MBS or bonds to be sold in a public issue before being eligible for repurchase. It would also be specifically aimed at improving the flow of funding for new mortgage lending.  RICS recommends that a proportion of this funding should be specifically allocated to first time buyers.
• First time buyer savings scheme The Government should establish a tax free savings account supported by Government contributions to help first time buyers save for a deposit. Refer to the Position Paper 'First time buyer savings scheme' in the PDF Downloads panel on the right.
• Stamp duty The Government should introduce a short term stamp duty holiday which links seamlessly into longer term reform to introduce a marginal stamp duty rate. More information.
• Preventing repossessions The Government should encourage Residential Social Landlords (RSLs) to offer mortgage rescue schemes that would see them buying a share in a home that is being repossessed and enabling the current occupiers to continue to live there. Refer to the Position Paper 'Increasing access to mortgage rescue schemes' in the PDF Downloads panel on the right.

New models for home ownership

• Rent to buy Potential homebuyers should be able to rent a property for an agreed period of 3 to 5 years with an option to buy at a pre-agreed price the end of the rental period.
• Build to rent and investment in the private rented sector Changes should be made to the planning system, stamp duty and the REIT regime to encourage larger investors in the private rented sector making it more professional and the tenure of choice for more people.

Availability and affordability

• Affordable rural housing Key recommendations of the recent Taylor Review must be adopted. In particular, landowners should be able to nominate people to live in affordable homes on land they provide and should be able to retain a financial stake in this land. It must also be made clear that affordable housing can be required on development sites smaller than 15 dwellings under Planning Policy Statement 3. More information.
• RSLs as lead developers on housebuilding projects RSLs should commission developers and contractors to carry out projects on their behalf so volumes built this way increase and the Government must ask why some RSLs are not acting as developers already.
• Conversion of low cost home ownership properties to rent RSLs should be able to convert low cost home ownership properties that cannot currently be sold to social rent/intermediate rent with grant with the possibility to convert back to home ownership products when the market recovers.
• Bring empty homes back into use The UK’s 600,000 empty homes should be brought back into use by reducing VAT on repair and maintenance and giving local authorities real power rather than ineffective Empty Dwelling Management Orders. Legislation on Empty Dwellings should be overhauled as a matter of urgency. More information.

Consumer Information in residential property

• Improvements to the HIP Government is being invited to respond to estate agency and conveyancing sector proposals for making the HIP more consumer-friendly and less costly for consumers, cutting out the possibility of duplication and providing the right information at the right time during the selling and buying process.
• Property flowcharts Simple route maps through the buying, selling and renting process should be available to all property consumers, helping them to understand what they should expect from service providers.
• Alternative to the Home Condition Report RICS has put forward proposals to create a more consumer-friendly report (The Property Report) to replace the HCR. This market-led product addresses the needs of both seller and buyer for more objective information on the condition of their property.

Regulation and Standards

• Response to the Carsberg Review RICS broadly supports Sir Bryan Carsberg’s recommendations on the need for comprehensive regulation of all property professionals and landlords.
• Residential agency codes/Property Standards Board RICS and other industry regulators are working on a principles-based update of the Estate Agency Code, with a view to gaining cross industry acceptance, and lodging it with the Joint Industry Property Standards Board whose role is to achieve consistent information and standards across residential property service provision.

RICS has written to the Chancellor and Housing Minister to urge action on this broad range of fronts. We will continue to call for better consultation with the industry and for a joined-up approach by government on residential property and housing issues.

Contact: James Rowlands, Policy Officer jrowlands@rics.org