• AGAINST a background of insufficient and inadequate housing, investment is the answer to the crisis.

Demand can come from three sources; owner occupiers including first-time buyers; social housing buyers (central and local government and housing associations); and private sector buy to let.

Each can buy second-hand or new-build but only increased demand overall will result in new-build.

The most effective growth driver is to encourage buy to let.

To boost investment is a three-pronged strategy; a working debt market (which is how the sector experienced explosive growth in the period up to 2020); an envisaged return on investment; and, third, freedom to sell a dwelling at market value.

If you can’t sell an asset as it becomes illiquid you won’t buy it. The Housing Act 1988 introduced Section 21 and hence liquidity to be able to sell a property with vacant possession at the end of an agreed fixed-term rental and the debt market took care of the growth and returns. But growth since 2020 has stalled.

The Finance Act 2015 phased out allowable interest on borrowing to personally-owned private rental property.

It now makes little sense to leverage due to what is considered to be a turnover tax. Indexation removal also whacked returns.

The overall effect has been a reduction in rental property held personally (about 50 per cent of rental property is personally owned and about 30 per cent of this is mortgaged).

Companies still enjoy allowable interest and the corporate sector has continued to grow but not by enough for the overall market to do so.

None of the serious political parties accept the three-pronged approach outlined above (liquidity; debt; and return) and I hope they are right in their optimism, but fear the opposite.

They believe planning to be the binding constraint. But to my mind that is just a hurdle, as is the reduced capacity of the construction sector.

If the demand is there new building will take place. Growth and improvements and tenant choice can then be achieved within the existing planning framework and without the use of public funding.

ALEX SHINDER, NW3