By Hugo Dixon
Hugo Dixon is Editor-at-Large, Reuters News. The opinions expressed are his own.
Britain’s main economic problem is that the supply of homes isn’t rising nearly as fast as demand. This doesn’t just create the risk of a new housing bubble; young people are finding it increasingly hard to find places to live, especially in crowded London and southeast England. So I make no apologies for returning to the topic after only three weeks.
The solution isn’t mainly to build new homes on greenfield sites. It is understandable that Brits don’t want to concrete over this green and pleasant land. Rather, the thrust of policy should be to use existing housing stock much more effectively, while building new homes in cities.
Look first at the existing stock. It’s not quite as tight as people think, but a lot of it is under-occupied or some even unoccupied. Rich people, including foreigners who buy houses and sometimes leave them empty for large chunks of time, have lots of spare space. So do many old people, who are often living in homes that suited them when they had large young families.
There’s nothing wrong with people wanting to have big houses. But the government shouldn’t be encouraging them to do so. That’s precisely what the current tax system does. Not only is housing woefully under-taxed; expensive homes are taxed much less as a proportion of their value than cheap homes. Effectively, the poor are subsidising the well off.