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Learn from Germany to help fix housing crisis, says IPPR

A new report by think tank IPPR has compared German and British housing policy and found there is much that the UK can learn from Germany in solving our housing crisis.
 

The key findings are: 
 

  • German local authorities commonly act to intervene in the land market - buying up and assembling sites, and delivering infrastructure before returning them to the market;
  • There are stark differences between the German and UK housebuilding sectors - in particular, the role of small and medium-sized buildering companies, which play a far greater role in Germany than they do in the UK;
  • Both countries are nearing the level of planning permissions required to meet their housing supply targets -  however, Germany is more successful in turning planning permissions into housing completions;
  • In Germany, tighter mortgage lending and a more stable rental market has driven a more balanced approach to housing tenure, reducing the demand for owner-occupied homes;
  • While the tax regimes in both countries attempt to incentivise property investment, Germany’s capital gains tax system places a stronger emphasis on longer-term investment.
     

The report also finds that Germany has managed to deliver more affordable homes than the UK in the last three decades, however its model for delivering them, through the equivalent of 20–30-year covenants, has led to poor outcomes with a sharp drop in their number in recent years.

 

Ed Turner, report author and senior lecturer in politics at Aston University, said, “Both Germany and the UK have faced challenges in delivering the number of homes that their citizens need.

 

“Germany has succeeded in delivering more homes than the UK over the last fifty years, and offers us powerful lessons in how our crisis can be solved, with a wider range of tenures available, a bigger role for SME builders, and a strong role played in local authorities in getting housing construction to happen.

 

“The German house building system also demonstrates the risks of deliver affordable homes using taxpayer subsidy without the proper safeguards in place to protect them in future. The UK Government should consider this carefully while it’s looking at the rules for ‘Starter Homes’ and other similar schemes.”

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