The International Monetary Fund (IMF) has said that lack of housing supply in the UK economy is a fundamental economic issue. However, the IMF did recognise the government’s efforts to increase new homes supply, while highlighting the barriers to increased homebuilding.
Discussing these barriers the report identifies that these include:
“Unnecessary constraints on brownfield and green-field developments, tax policies that discourage the most economically efficient use of property, and underdeveloped rental markets with relatively short lease terms.”
The report also proposed setting limits on the number of low deposit mortgages that lenders could issue due to their risking the UK’s financial stability.
The IMF has warned the government that accelerating house price inflation – fuelled by low mortgage rates and home buying initiatives including Help to Buy – is the greatest threat to the UK’s economic recovery.
Mind you, the IMF has also just admitted that the fund ‘got it wrong’ in its assessment of government’s austerity measures having a negative affect on the UK growth, revising its economic forecast and saying that the economy will now grow by 2.9 per cent in 2014.
By David Mote.