More than 2 million families have been locked out of home ownership as a result of landlords buying up properties to rent out, a new report by a Conservative MP has found.
The study, by Neil O’Brien, calls for new government action to stop people buying homes as an investment, including by abolishing tax relief for landlords and clamping down on overseas buyers.
It says minsters also need to be more radical in boosting housebuilding in order to regain the initiative on housing from Labour ahead of the next election.
The proportion of renters is rising faster in marginal seats that the Conservatives need to gain in order to retake a parliamentary majority than in safe Tory constituencies, the study found.
The report was published by new Tory think tank Onward, which is led by Theresa May’s former deputy head of policy, Will Tanner.
It said there would now be 2.2 million more families who own their own home if it were not for a surge in buy to let and a fall in housebuilding since 2000.
In a finding likely to raise pressure on ministers to increase building, the report found France has built twice as many homes each year as Britain since 1970 – a total of 7.8 million more.
As a result, house prices in France have risen at only half the rate they have in the UK, while rents are also significantly lower.
Mr O’Brien, a former special adviser to Ms May and George Osborne, said: “We can’t solve the housing problem with one hand tied behind our backs. As well as building more homes, we need to change the balance between the rented sector and home ownership.
“We should protect existing landlords but discourage more people from investing in rental property, because the buy-to-let boom has bid up prices and reduced home ownership among younger people.”
He added: “To build more homes we need to deal with the underlying reasons people oppose so much new development. Today, too many homes are built in exactly the places which maximise public opposition, tacked onto the edges of existing settlements, or else crammed next to existing houses.
“Too many homes come without the supporting infrastructure that is needed, and too often development is approved without any benefits for existing residents. Looking at other countries shows that we will only build enough homes if we build in ways that address these problems.”
The report found the cost of renting has soared in recent decades. Between the 1960s and early 1980s, renters spent an average of 10 per cent of their income on rent – rising to 15 per cent in London.
By the period between 2000 and 2017, that had more than doubled, to an average of 30 per cent and 40 per cent respectively.
Onward said landlords buying properties in future should be treated the same as owner-occupiers when it comes to tax, rather than receiving mortgage interest relief and generous discounts on capital gains tax.
The current system mostly benefits developers and landowners, Mr O’Brien said, with local communities losing out on up to £9bn of land value increases each year because the price surge when planning permission is granted overwhelmingly benefits the developer.
Developers are also often failing to contribute to the wider community, with 26 per cent of smaller developments and 7 per cent of larger projects involving no contributions from the developer.
The Harborough MP said ministers should let councils restrict the number of properties that can be bought by overseas buyers.
And the Treasury and Bank of England should establish a powerful taskforce with the aim of making housing more affordable, he said.
The report also says councils should be allowed to buy land at current market values, rather than the hugely inflated price once potential planning permission is factored in. Labour has previously vowed to introduce a similar policy.
Mr Tanner, director of Onward, said: “If the government wants to regain the support of young people and win the next election, it must be unflinching in its pursuit of greater home ownership.
“That means hard choices, like ending tax breaks for new landlords and giving councils much stronger powers to assemble land for new towns and villages. But it doesn’t mean, as so often is said, concreting over the green belt or steamrollering local opposition. We must build the homes Britain needs while protecting the views and places people love.”