Photographer: Chris Ratcliffe/Bloomberg

The U.K. Has a Plan to Reduce ‘Skyrocketing’ House Prices

  • Home prices continuing to ‘skyrocket,’ policy paper says
  • Developers may have to build swiftly after getting permission

U.K. Prime Minister Theresa May’s government said it would force local councils in England to set out how they’ll build more houses in an effort to increase supply and push down prices that make home ownership prohibitively expensive for many young people.

In a formal policy paper published Tuesday, Communities Secretary Sajid Javid said the government will give local authorities powers to force developers to build quickly once planning permission is granted, but in return the central government will expect councils to show they have proper plans to get more homes constructed. He said he wants to see more high-density housing built close to public transport.

“With prices continuing to skyrocket, if we don’t act now, a whole generation could be left behind,” Javid told Parliament in London. The average home in the U.K. costs a record eight times average earnings, and more than 2 million households spend a third or more of their disposable income on housing.

Read a recent story on demand for London property in the aftermath of Brexit.

Javid also said he wanted to open up the house-building market. Currently 60 percent of houses are built by 10 companies.

Opposition lawmakers questioned why he hasn’t gone further. In an effort to keep his Conservative Party onside, Javid said the government will continue to prohibit house building on rural “greenbelt” land that surrounds urban areas.

“We have to build on greenbelt land to give people the chance of a decent home,” the Labour Party’s Barry Sheerman said. “Why doesn’t he have the courage?”

The U.K. needs to build 300,000 homes a year to keep pace with demand, according to a July 2016 report by the House of Lords. About 168,000 new homes were completed in the 12 months through March 2016, government data show.

Shares in the U.K.’s largest housebuilders rose. Persimmon Plc, the country’s biggest home builder by market capitalization, climbed as much as 3.3 percent, the most in a month.

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