To buy or not to buy?

Thursday, March 18, 2010

More people should be encouraged by the government to rent rather than buy, a new housing study has recommended.

Castles in the Air, commissioned by the Chartered Institute of Housing (CIH) Scotland, says while the benefit of no capital gains tax makes ownership attractive, ultimately there are possible negative "macro-economic" impacts for the country.

Edinburgh-based authors, Newhaven Research, say the Scottish government should debate on housing policy towards owner occupation and discuss with Westminster the prospect of amending current treatment of capital gains from ownership.

The study reads: "The current framework of housing taxation predisposes consumer choice towards owning, to the possibly considerable detriment of the economy as a whole, and society more generally, as renting becomes generally perceived as a second best option and an indicator of failure.

"Accepting this introduces other problems. The majority of home owners in society are unlikely to welcome the prospect of being taxed on capital gains they make from their homes, however reasonable this may be from an economic perspective."

The study, published at CIH Scotland's annual conference, also recommends rethinking the approach to low cost home ownership, researching the strengths and weaknesses of equity loan and equity release schemes, and auditing local authorities' capacity to deliver increasingly demanding local housing strategies.

Elsewhere, Housing Minister Alex Neil said he wants to look at "radical measures" and a "fresh approach" to affordable housing policy.

The Scottish government plans to publish a consultation document in May debating the challenges facing housing over the next five years.

Neil said: "Housing policy is at a crossroad. Traditional methods of providing housing will need to change because of the scale of the new challenges – climate change; new lending climate; squeeze on public funding.

"That is why we need to recognise that radical measures are required to shape future housing policy in Scotland. We will need new approaches: clearer priorities; new ways of raising finance; and a new focus on making best use of the existing stock."

Scottish Federation of Housing Associations, acting chief executive Andrew Field said: "Housing associations and co-operatives do a fantastic job of managing and developing housing for communities across Scotland, and also lead the way in innovative schemes to fund housing and community projects.

"We will shortly be hosting a major meeting of the sector with the Minister to discuss these issues."